By Brad Foster

The failure of the much-anticipated C2 Melbourne event continues to shock the local business events sector, with creditors now only expected to see one fifth of the money owed to them.

On November 19 creditors accepted a Deed of Company Arrangement (DOCA) which outlined:

  • A lump sum contribution of $525,000 will be made available from the Canadian-based C2 International within 14 days of executing the DOCA in full and final settlement of all claims;
  • C2 International will not prove in the DOCA; and
  • The DOCA will release all third party and related party claims that may be available in a liquidation scenario.

One of those creditors – and one of C2 Melbourne’s biggest early supporters – was the Melbourne Convention Bureau (MCB).

MCB CEO Karen Bolinger told micenet following the meeting that “C2 International has had significant unwavering support from the Melbourne Convention Bureau, the events industry and the corporate community.”

“MCB is deeply disappointed with the outcome of the administration process and the impact that the C2 event cancellation has had on the Victorian events industry and stakeholders.  Having considered the recommendations of the administrators, MCB reluctantly accepted the proposed deed of company arrangement.

“From an MCB perspective C2 had all the right qualities and track record to be established in Melbourne as an annual, innovative business event. It is unfortunate that notwithstanding MCB’s financial and industry support, that this event was not able to be seen through by C2 Melbourne.

“The cancellation of the 2018 C2 Melbourne event came as a shock to MCB, particularly given the positive messaging being provided from the C2 Melbourne management team in the lead up.

“The administration process is still ongoing and we anticipate a final outcome for the businesses and suppliers impacted in early 2019.”

The background

When C2 Melbourne Pty Ltd was incorporated in September 2017 after a reported two years of negotiation between various Victorian government bodies and the Canada-based C2 International, there were plenty of celebrations.

Press releases were fired off claiming Melbourne would host the first international C2 event with attendance figures expected to be more than 2000. The mega Canada event which started in 2012 now has upward of 6500 attendees.

Further claims were made that C2 Melbourne would create more than 100 jobs.

Early on, C2 secured interest from media outlets, including Fairfax Media, with at least one of the company’s journalists flown to C2 Montreal as a guest. On July 4 The Sydney Morning Herald ran an article on C2 coming to Melbourne, even including speakers in Melbourne would include Ernst and Young global vice chair of markets, Uschi Schreiber, tech super fund founder Paul Bennetts and entrepreneur Lakshmi Pratury.

C2 Melbourne was due to be held between November 30 and December 1, 2017.

As previously reported, C2 Melbourne in 2017 didn’t happen and the event was postponed to October 2018.

When in June 2018 and August 2018 two company directors resigned, citing ill-health, a decision was made that C2 Melbourne Pty Ltd should cease operations, thereby putting an end to the C2 Melbourne event.

It is believed that the company had sold just 200 tickets (which at the time were being sold for more than $2000 each).

The company had four directors – Richard St Pierre (also President and shareholder of C2 International), Arthur Davis, Martin Enault (formerly CEO of C2 Melbourne until he resigned as director due to ill-health on August 17, 2018), and Martin Vallee (who resigned due to ill-health on June 1, 2018).

At the time C2 Melbourne Pty Ltd closed its doors it had approximately 30 employees, according to papers prepared by the administrators (Rodgers Reidy Pty Ltd) which was brought in to look into the company’s affairs.

In a statement provided to the administrators by C2 Melbourne Pty Ltd director, Richard St Pierre, the company’s failure was due to:

  • Insufficient ticket sales which led to the cancellation of the C2 Melbourne 2018 event.
  • Cancellation of a proposed major government contract.

Administrators Rodgers Reidy found that funding for the C2 Melbourne event in October 2018 was to come from advanced funding from C2 International ($479,208).

C2 Melbourne had also been provided with what the administrators described as “a grant” from the Melbourne Convention Bureau (MCB) of $1.485m, with a further $165,000 payable to C2 Melbourne on achieving the attendance target of 2000 delegates.

The administrators found that the MCB paid C2 Melbourne $550,000 – the first instalment of the $1.485m grant – on July 9, 2018.

The administrator also claimed in their report that in addition to the Melbourne event, C2 Melbourne provided event hosting services to a PricewaterhouseCoopers event in Hong Kong on or around August 2018, and had entered into a contract with Ernst and Young (EY) to organise its Partners’ Conference in Sydney in late November 2018.

The cost of this conference was $2,592,032 (inclusive of GST) to be paid by way of six instalments. The first two instalments totalling $1,039,452 were deposited in the C2 Melbourne company bank accounts on July 27, 2018.

Just prior to the administrator’s appointment, according to the administrator, “a new contract appears to have been executed between EY and C2 International in relation to the EY [Sydney] conference in the week prior to the administrator’s appointment.”

The administrator said the task to be carried out as per the new contract “is identical to the original contract between EY and the company.”

“The cost of the new contract, being $2,482,032 (inclusive of GST) is similar to the costs of the original contract between EY and the company; and the new contract between EY and C2 International specifically provides that the first two instalments of the contract sum have already been paid to C2 Melbourne and that all future payments will be paid directly to C2 International.”

The administrator’s investigations also identified payments totalling $1,381,547 that were made by C2 Melbourne Pty Ltd to C2 International between August 2, 2018, and August 28, 2018. These included nine separate transfers of $150,000.

The administrator said if a liquidator was appointed, the liquidator would have strong grounds to pursue an unreasonable director related transaction claim against C2 International, Mr St Piere and/or the former directors who held office at the time the payments were made, for the sum of $1,381,547.

The administrators cite in their investigations that the following may have contributed to the failure of the company:

  • Poor financial control, including the lack of records available to correctly record and explain its transactions and financial position and to enable true and financial statements to be prepared and audited.
  • Poor strategic management of business; and
  • The transfer of funds totalling $1,381,547 and the EY contract belonging to C2 Melbourne to C2 International

Show me the money!

Despite what appeared to be a healthy bank balance in early August, C2 Melbourne Pty Ltd called in the administrators leaving companies that had undertaken work in preparation for C2 Melbourne, along with others, like real estate managers Aohua Sheng Le Property Pty Ltd, now listed as creditors.

In its October 11 report, Rodgers Reidy reported that parties claiming to be creditors of the company totalled $2,415,688. Major claims were:

Aohua Sheng Le Property Pty Ltd                             $505,273

Melbourne Convention Bureau                                 $500,000

MCI Group                                                                          $237,055

Event Studios Australia                                                  $159,068

Diversity Rigging and Entertainment Services      $117,793

The administrator also reported that C2 International was also a creditor, claiming it was owed $479,208, however, at the time of writing the October 11 report, it had not been provided with documentation to substantiate this claim.

In 2017, MCI, also a creditor, said in a press statement that it had joined forces with C2 International, “with the support of the Victorian State Government and the Melbourne Convention Bureau in bringing the world’s most innovative business conference to the Asia Pacific region.”

MCI Group CEO, Sebastien Tondeur said: “Our partnership with C2 embodies our mutual love for ideas and delivering not just innovation but true progress.”

micenet contacted MCI in Sydney for comment after learning it was also a creditor but did not receive a reply at the time of going to press.

On November 19, 2018, creditors accepted a Deed of Company Arrangement (DOCA) which outlined:

  • A lump sum contribution of $525,000 will be made available from C2 International within 14 days of executing the DOCA in full and final settlement of all claims;
  • C2 International will not prove in the DOCA; and
  • The DOCA will release all third party and related party claims that may be available in a liquidation scenario.

This effectively means that creditors will receive up to 20 cents in the dollar.

Australia’s talent forgotten?

Aside from the tragic loss of income for so many companies, and particularly the small businesses involved, one matter that seems to have escaped the discussion around the failed C2 Melbourne is why it was ever secured in the first place and, according to one individual, how “out of touch” a number of the key players are within our industry generally.

One micenet reader and long-time Victorian-based event practitioner was alerted to a launch event announcing C2 Melbourne at IMEX in Frankfurt in May 2018 which they viewed online.

“It was quite an extraordinary presentation as it seemed to say that Melbourne was still stuck in the era of events just being a venue, catering and a speaker, and that C2 and the MCEC together were going to change this and bring Melbourne into the future,” they said.

“We were all pretty puzzled – and also annoyed – as a lot of very sophisticated, experienced, focused, innovative events already happen in and come out of Melbourne. Many [event practitioners] from Melbourne travel and work around the world.

“The three massive worldwide event companies – Jack Morton, GPJ and Imagination – have all long had strong operations based in Melbourne. The best of Melbourne’s business events rival anything produced around the world.

“A lot was said about C2’s Cirque du Soleil link, however, Cirque had sold their small interest in C2 a number of years earlier.”

Our contact said they had already attended a C2 International event in Montreal in 2017.

“I do try to get to interesting events and it was a good event. Some great speakers. Some of the logistics were all over the place though. I stood in too many queues in the rain.

“I do understand why they did want to secure C2 for Melbourne to start with.

“What I don’t understand is why they didn’t look far more closely at everything after the 2017 event was cancelled? The failure of the 2017 event should have rung alarm bells.

“It is certainly embarrassing for our industry. And a complete debacle. We have a great industry with many great companies that do terrific, world-class events. I wish the government and government agencies would spend a bit more time being proud of their local industry rather than being seduced by foreigners.”

 

 

Comments

comments