Maximising returns in a not-for-profit administration

When a not-for-profit dedicated to creating and distributing training and learning materials found itself in financial difficulty, the members turned to Jirsch Sutherland for guidance. With just eight employees, a modest turnover of between $1 million and $2 million, and a national reach, the organisation had long provided valuable resources. But as the industry changed rapidly, it was clear a different path forward was needed.

“This matter highlighted how even well-intentioned organisations with a long-standing purpose can be vulnerable to sudden shifts in their sector. Our role was to preserve value where possible and secure the best outcome for creditors and members alike,” says Nash Chance, Manager with Jirsch Sutherland.

Background: caught in industry upheaval

The not-for-profit had built a reputation for producing high-quality training materials. Yet the world around it was changing:

• The rise of online learning platforms saw a sharp reduction in demand for traditional products.
• Larger competitors began consolidating the sector, either through distressed acquisitions or business-as-usual takeovers.
• The shift created an unforeseen and dramatic decline in revenue.

“These pressures left the company unable to continue operating as it had. With the support of its members, the decision was made to appoint Jirsch Sutherland as Voluntary Administrators,” explains Chance.

The Solution: protecting assets and preserving legacy

From the outset, the focus was on maximising value for all stakeholders and keeping disruption to a minimum. Jirsch Sutherland stepped in to manage the process and deliver a workable solution:

• Asset sale: the organisation’s most valuable resource was its intellectual property. A listed company was identified as a purchaser, willing to acquire the IP on an “as is, where is” basis.
• DOCA proposal: a Deed of Company Arrangement (DOCA), funded by the members, was structured to return more to creditors than liquidation would have provided.
• Collaboration: the team worked closely with the members’ advisers to build a solution that addressed the concerns of creditors while protecting the organisation’s legacy.
• Technical transition: Close coordination with the IT provider ensured that platforms holding the IP were successfully handed over, maintaining the integrity of the assets.
• Customer and employee management: While customers had to wait for certainty during the sale process, their interests were ultimately safeguarded. For employees, although all were terminated on appointment, the purchaser offered contract work to some, helping soften the impact.

“The IP was the organisation’s crown jewel, and our focus was on protecting and realising its value. Identifying a willing purchaser who understood the risks was the turning point,” says Chance. “It wasn’t a simple matter of putting the assets on the market. We had to keep customers engaged and interested, even though they were in limbo, to make sure the IP still held real-world value.

“Working with the IT provider was crucial. The content and platforms weren’t straightforward and handing them over securely meant the purchaser had confidence they were getting what they paid for.”

Results: turning loss into lasting value

The outcomes demonstrated the value of the Voluntary Administration process:

• Creditors came out ahead: the DOCA was unanimously approved, ensuring materially better returns than would have been possible in liquidation.
• Secured creditors benefited: the sale of IP created an additional pool of funds to make payments that otherwise wouldn’t have been achievable.
• Employees found opportunities: while redundancies were unavoidable, some staff secured ongoing contract work with the purchaser.
• Value was preserved: the organisation’s intellectual property remained in use and retained relevance in the training sector.

“The unanimous creditor support for the DOCA spoke volumes. Everyone could see this outcome was better than liquidation,” Chance adds. “Without the sale of the intellectual property, secured creditors would have been left short. This process gave them something they simply wouldn’t have had otherwise.

“For us, the real success was that the organisation’s purpose didn’t disappear completely. The IP lived on, continuing to provide value in the sector rather than being lost in a liquidation.”