21 March 2024

Company in liquidation but restructured business continues, says Rubik3 founder

| Ian Bushnell
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man leaninging against a wall

Rubik3 founder and director Guy Earnshaw: the business remained sound and operating. Photo: Region.

Rubik3 founder and director Guy Earnshaw has moved to quash reports that the award-winning consulting and recruitment business he founded has gone bust.

Mr Earnshaw said the business had been restructured in March to June 2022 to streamline its work, including government contracts worth around $30 million.

He says a federal government client fell victim to cyber fraud and misdirected funds to an incorrect bank account in February 2022.

Mr Earnshaw said the Tax Office issued a tax debt in September 2023 and extended some leniency to the company while legal action was taken to recover the outstanding funds, some of which had been recovered.

But earlier this year, the ATO demanded the tax debt be paid in full.

The Tax Office’s tough stance meant Rubik3 could no longer trade and he said he had no choice but to put the company into administration. The government contracts in question were purchased by his previously established entities Really Awesome People and Rubik3 Indigenous.

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Rubik3 is now in liquidation after notice was given on 7 March for the company to be wound up. Aaron Torline from Slaven Torline was appointed liquidator.

However, Mr Earnshaw said his other entities, Rubik3 Indigenous and Really Awesome People, which operate out of Melbourne, where he lives, were doing fine.

“The only reason that the company is being wound up is because the ATO wanted the money before I could recoup it through court action,” he said.

All employees were being paid, their superannuation was current, and no one had lost their job.

Mr Earnshaw said the fraud and an internal dispute in which some contracts had been diverted had left Rubik3 short of working capital. Legal action continued to recover these funds and the fraud matter was now in the hands of the liquidator.

He said the business restructuring and relocation to Melbourne came about because it was realised that Rubik3 had become cumbersome, with too many services in one entity, which was confusing for clients.

“I did a business restructure to move the business to Melbourne, where I live, and split up the business so that different service lines were in different entities, which meant that we could relate them to the client base easily,” he said.

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Rubik3 had retained a consulting role.

Mr Earnshaw said current contracts were not at risk and he had not fielded any concerns from government clients, none of which were exposed to Rubik3.

The agencies that Mr Earnshaw has done business with include the Bureau of Meteorology, the Department of Veterans’ Affairs, Health and Aged Care, Employment and Workplace Relations, and the National Emergency Management Agency.

The company also holds one $163,900 ACT Government contract for professional and consulting services to the Chief Minister, Treasury and Economic Development Directorate.

The latest trouble comes after a tough few years for Mr Earnshaw, which included a divorce, the departure of his business partner, internal disputes, and a changed government environment with the shift from contractors and consultants to in-house work.

But Mr Earnshaw, a four-time AFR Top 100 lister, said he wanted to reassure people that the business remained sound and operating.

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To me, this article kind of puts a positive spin on a business which has essentially rearranged itself to get out of some tax debts, which doesn’t strike me as a particularly praiseworthy thing as a taxpayer.

@Ian
Agreed. I wonder is “a business restructure” a euphemism for Trump-style bankruptcy, to conveniently clear debt, while still being able to operate, and leave creditors (in this case the ATO) out of pocket.

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