The outcome for employees and other creditors of Photo Corporation Group (PixiFoto) remains uncertain, with the administrator, BCR Advisory still waiting for PCG director, Peter Watt, to issue a Deed of Company Arrangement prior to the next meeting of creditors.
An urgent assessment of the financial position of the company led to the decision to close down the 42 Australian photo studios, and to wind down the remaining operations. The head office and laboratory operations in Granville, NSW, are currently continuing to trade in administration, to complete outstanding customer orders for both PixiFoto customers and the (now sold) Pixifoto Schools business. The Granville lab will continue on until mid-September.
The first meeting of creditors of the company was held on August 6, at which time the appointment of administrators was ratified and a committee of creditors was appointed.
The PixiFoto collapse extends beyond Australia, with the New Zealand operations also in administration. PixiFoto operated from eight The Warehouse outlets in NZ, mainly on the North island.
However PixiFoto UK and Ireland continue to trade. A ex-staff member told Photo Counter that she believed Peter Watt may have been involved in purchase of the UK operations from PCG. Another source confirmed that the UK business had been sold, but did not reveal to whom. There are 34 mobile and permanent outlets in Ireland, and an undisclosed but far larger number in the UK, where it operates in selected Boots, Mothercare, M&Co and independent stores.
The Group’s UK operations were acquired in 1993, the Dutch operations (no longer operating) commenced in 1994 and Ireland in 1995.
In addition to the retail operations, PCG had film processing and printing laboratories in Australia, the UK and NZ, and at one stage employed approximately 2000 full-time, part-time and casual employees. It described itself as ‘the largest in-store mobile and permanent portraiture company in the world outside the United States.’
Independent Photo (IPS) is believed to be one of the larger creditors among local photo industry suppliers, and managing director Stuart Holmes is on the creditors’ committee. He told Photo Counter that PixiFoto had been among his company’s top 10 clients, with most business generated by the Schools division.
‘It’s a bit of a kick in the guts,’ said Mr Holmes. ‘We were fulfilling the Kodak supply agreement with PixiFoto, and so we were somewhat caught in the crossfire,’ he said.
Other known major creditors include Westpac, NEC (computer systems) and Konica Minolta, but a full list of creditors and outstanding obligations is yet to be published. It’s believed, but unconfirmed, that PixiFoto’s debts are under $3 million, the bulk of which is owed to staff.
Recent sale of Schools division
Suppliers were not alerted to Pixifoto’s recent sale of its Schools Division to Master Schools Portraits (MSP), Wagga, leading IPS to forward-order now unwanted shipments of paper and chemistry in the unusual widths required by PixiFoto Schools. (Master Schools operates its own photofinishing lab in Wagga and, although an IPS customer, doesn’t use the same paper sizes.)
‘Kodak is trying to assist us to redeploy that stock elsewhere. This was totally avoidable if we had been told the schools divisions was to be sold. In this situation we’ve been let down by the customer, but we will weather this,’ said Mr Holmes.
He added that MSP was a very efficient, quality-conscious operation, which would now become an even more important player in schools photography. ‘From that point of view, this is a good outcome,’ said Mr Holmes.
It’s not known whether the proceeds from the sale of the PixiFoto Schools Division have been used to reduce the parent company’s debt.
‘We are aware of, and are currently examining a sale of business contract which was entered into by the company prior to our appointment, the particulars of which are commercially sensitive,’ BCR’s Damien O’Reilly told Photo Counter in response to questions about the Schools Division sale.
‘Regarding the balance of your questions regarding the financial position and potential sale of the company, we are currently investigating these matters, and as a result, it would be inappropriate for us to comment.’
Shabby treatment of staff
Staff, many of which have been with PixiFoto for 10 years or more, were alerted by phone on Sunday evening that there would be a conference call the following morning. At the 11am conference call, most employees were sacked immediately, with one person from each outlet kept on to liaise with customers.
They were paid for their last two week’s work but have yet to be told whether entitlements such as long service leave, holiday pay and superannuation will be paid in full.
‘It was very distressing the way it happened,’ one ex-staff member told Photo Counter. ‘Two hundred and seventy seven people sacked over the phone.’
Another ex-staff member contacted Photo Counter to describe an unhappy, bullying work environment deteriorating over the past two years, with studio staff being pushed to the point of having to take stress leave, relentless and unrealistic demands to up-sell and constant and aggressive monitoring. It’s been claimed that junior staff were exploited financially, head office harrassment was a daily occurrence, and maintenance of equipment including studio lighting was neglected to the point that there were occupational safety issues.
The co-director Peter Watt has apparently had little day-to-day involvement in the running of the company recently. He now lives on an island in Cyprus, according to ASIC documents. Former director and now company secretary Mike Roubicek has played more of a general management role. The other director in PCG is Peter Watt’s son, Michael Watt, 29, who still resides in Australia.
The following Facebook comment from an ex-staff member – who last week was still trying to help customers locate orders, secure digital files, refund lay-bys, etc – provides an insight into the schism between staff and management at PCG:
I am furious that the owner of this business can be so unprofessional as to give us less than one week to organise the ordering and pick-up of customers’ images. It is unprofessional to allow only one staff member to be paid this week, while all others were callously dismissed on the very day we found out. I am thankful that I had the aid of those staff members, who came in unpaid to help me get as many lay-by’s finalised with copyright, and to get orders collected.
This same business owner has the same thriving business in the UK, but claims we won’t get paid our entitlements for possibly one to three years. This same man will allow each and every studio, including every portrait held there, to be dismantled and destroyed.
I feel saddened for the many people that I could not contact and for one reason or another, have not heard the news. There are customers overseas who believe their portraits are safe. Our business, while not the high achieving days of say, five or six years ago, was still fruitful. I was forced to cancel 50 appointments this week and still had people come into the studio today, our last day, to make a booking. It is a sad day to lose such an iconic Australian brand name.
I reckon I can speak for all of the Photo corp employees when I say: We did our best to get all our valued customers their images.