Careers Australia, one of the biggest vocational education providers, has gone into voluntary administration with 1100 staff stood down and classes cancelled for 15,000 students.
David McEvoy and Martin Ford of PPB Advisory, appointed administrators, are doing an emergency assessment of the business which runs 14 campuses across Australia.
“We do not currently have sufficient funds available to meet payroll and other costs which would allow us to continue trading the group on a business as usual basis,” the administrators say in a letter to staff.
The ABC reports that students were sent a text message: “All activities of Careers Australia Group are suspended. No classes, no workplaces effective immediately. Further information will be provided.”
Careers Australia, owned private equity firm White Cloud Capital, at one time received hundreds of millions of dollars in funding from the federal government.
However, this week the company was told its students were not eligible for loans under a new scheme.
“The recent decision by the Federal Department of Education and Training not to approve Career Australia’s application to become a VET Student Loan Scheme Approved Course Provider has materially impacted the Group’s operations,” says administrator David McEvoy.
“We are working closely with management and key stakeholders to urgently determine whether the business can be sold or restructured. Regrettably, we have had to suspend all classes and stand down employees while we assess all options available to the business moving forward.”
The company was hit by a series of allegations around high pressure door-to-door selling of its courses to people who had no chance of completing them.
Career Australia sold courses saying they were “free”, when students would in reality rack up a debt to the government, and offering iPads and laptops as inducements to sign up.
Careers Australia admitted last year to “false or misleading representations and engaged in unconscionable conduct” after an investigation by the ACCC (Australian Competition and Consumer Commission).
The company then had to cancel at least 12,130 student enrolments and repaid $44.3 million to the federal government.
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