A disgruntled creditor owed almost $1 million in unpaid rent is seeking to wind up embattled ASX listed coworking outfit Victory Offices.
The flexible work firm is facing the wind-up application in Victoria’s Supreme Court from retirement village creator Zig Inge Group.
The retirement developer, whose wealthy founder and namesake Zig Inge passed away last month, owns an office block in Melbourne’s leafy St Kilda boulevard in which Victory ran a coworking space.
Zig Inge is trying to claw back $985,268 in unpaid rent and has also asked the court to appoint liquidator Shane Cremin from Rodgers Reidy to take control of the firm.
A run on the ASX-listed Victory’s shares and a COVID-caused slump in office-based working is putting extreme pressure on the group’s business model, forcing it to close seven loss-making hubs in Sydney and Melbourne earlier this month.
One of those hubs was in Zig Inge’s 180 St Kilda Road building.
Others that closed were in Sydney’s Barangaroo, Castlereagh, Mount and George streets, as well as in Lang Walker’s Melbourne tower at 727 Collins Street, and another building in Box Hill.
Shares in Victory have suffered catastrophic falls, slumping from a pre-pandemic peak of $2.14 to a miserly 2.3¢ today, wiping out nearly $76.5 million in shareholder value in just three years.
The company floated on the ASX with much fanfare in 2019 with a market capitalisation of about $80 million. It is worth $3.55 million at current market prices.
When it announced the closure of the loss-making venues on 3 June, Victory said the decision to exit was “expected to have a positive impact on the company’s remaining portfolio of office locations”.
Exiting the seven hubs will have a negative impact on revenue, but would not affect profitability, it said.
The group still operates 14 offices, most of them in Victoria. It has abandoned the Sydney market altogether and has just two hubs in Queensland, another two in Canberra and one in Perth.
“The ongoing, proactive management of occupancy levels across individual locations will continue. The board and management are confident that this will support improved performance and a return to profitability sooner than anticipated,” Victory said.
Zig Inge’s acquisition and development manager James Redman said, in a statutory demand filed with the court, the unpaid rent owed covered a six-month period from 1 December last year to 1 June this year. The total amount included interest of $34,804.
Inge emigrated to Australia from Latvia in 1949 and worked as a real estate agent before founding a construction company with his brother, Alex. Before passing away last month aged 97, he went on to make retirement villages and build a personal fortune that propelled him on to the Australian Financial Review Rich List.
Victory Offices was contacted for comment.
The winding-up order will be heard by associate justice Fiona Steffensen on 13 July.