Australia: Sky and Space goes Chaper 11
April 8, 2020
By Chris Forrester
Another would-be satellite constellation has applied for Chapter 11 bankruptcy, in its Australian version of the process.
The company, Sky and Space Global Ltd, entered Voluntary Administration of its financial affairs and has appointed a local firm of Accountants to begin negotiations with its creditors. A Creditors meeting date has been set for April 16th. The Australian Stock Exchange was notified on April 7th.
At the end of January the company thanked investors and shareholders for their support, but it now seems that it had been unable to raise a target A$10.9 million to keep afloat.
Sky and Space had intended to launch a constellation of small satellites in Q1/2021 and to begin servies during Q2/2021.
Its most recent Annual Report (at June 2019) reported it had about 50 staff although had made a loss of A$30.4 million before tax.
However, the Annual Report was not without problems and its Auditor (KPMG) stated within the report that the company’s assessment was “not a true and fair reflection” of the company’s performance in the year to June 2019. KPMG criticised the omission of an A$118 million “onerous contract”, adding: “Had the group accounted for this provision … an expense would be recorded in the consolidated statement of profit or loss and other comprehensive income for approximately A$118 million with the recognition of a current liability for the same amount,” KPMG said.
“This would have the effect of increasing the operating loss and decreasing shareholders’ equity by A$118 million, and current and total liabilities would increase by AU$118 million. This matter results in further misstatements in the notes to the financial report as a result of the group referring to the incorrect annual result, such as in the tax expense reconciliation,” the Auditor added.
Sky and Space said they disagreed with this element of the Report, saying in a statement to Australian Stock Exchange: “The A$118 million of potential onerous contract provisions relate to possible contract termination costs for the completion of the design, engineering, construction and supply of the 6U and Pearl nanosatellites by GomSpace and launches of nanosatellites by Virgin Orbit.”