D365 Group tech company collapses into liquidation owing $1.5m, including $983k to staff

An Australian technology company that collapsed into liquidation because its staff weren’t getting paid owes more than $1.5 million to creditors.

In early October, news.com.au reported that the Federal Court ordered D365 Group to go into liquidation.

D365 Group, which built software for health, real estate and accounting services with offices in Sydney and Melbourne, had been the subject of several news.com.au investigations after disgruntled staff and customers came forward.

Half of D365 Group’s staff had quit the firm in the space of a year because their superannuation went unpaid for months ranging from $7000 to $45,000, and many were not paid their final wages. This even led to one staff member sending a sensational company-wide email advising everyone to “get out while you can”.

The Deputy Commissioner of Taxation began winding up proceedings against the company in late September to recover unpaid superannuation to staff spanning back years.

Now the amount of money the company owed to staff has been revealed, according to preliminary investigations from D365 Group’s appointed liquidators, William Honner and Andrew Scott of the insolvency arm of accounting firm PwC.

According to a report sent to creditors, a total of $1.567 million is owed to creditors.

But of that, the bulk is owed to staff and ex-staff. Employees are owed $157,000 in unpaid wages and unpaid annual leave.

The business also owes a whopping $963,958 to staff for their unpaid superannuation dating all the way back to the company’s incorporation in 2018.

According to the liquidator’s report, D365 Group’s sole director, David Blumentals, has not supplied them with the books or records of the company.

As a result, liquidators’ estimations on the amount owed to staff are based on a creditor’s statutory demand the tax office issued to D365 Group in May.

“The period of the unpaid superannuation is from April 2018 to April 2022,” the liquidators wrote. “The amount includes penalties and general interest charges.”

Liquidators added that the amount owed could rise as more employees get in touch with them.

They noted that there is a government safety net, the Fair Entitlements Guarantee (FEG), which covers a portion of employees’ unpaid wages in the event a company goes bust.

However, unfortunately, the scheme doesn’t cover superannuation so it’s likely staff are set to miss out.

The tax office is owed a further $443,000 from pay as you go tax, GST, fringe tax benefits and penalties.

“We are currently investigating a potential transfer of the Company’s business to a related party,” the liquidators also noted.

News.com.au contacted Mr Blumentals for comment.

The creditor report also stated that the business appears to have ceased trading from June last year, around the time it started to receive demands from the Fair Work Ombudsman and the tax office looking to recover employees’ money.

However, it appears it was still taking customer money after this point in time.

Sarah MacRae, the managing director of NSW-based 24/7 Care Services, issued a warning against D365 Group in August this year as the tech firm left her with a dud product.

The boss of the disability care provider took out a $55,000 loan to fund a CRM (customer relationship management) system for her business, a single platform meant to streamline the booking and payment methods for her 43 clients.

D365 Group started building the software in August 2022, with promises it would be done by October.

Instead, Ms MacRae only received the final product four months ago and she said it doesn’t work the way she was promised.

“It’s hard when you’re paying $1500 a month for a program you can’t use,” she told news.com.au.

“Now I’m using Excel documents, hours and hours of my time, doing everything manually.”

She contacted D365 Group for help but says they have “dumped us” and severed all contact.

News.com.au spoke to more than 10 former staff members at D365 Group who had taken matters to the Australian Taxation Office and the Fair Work Ombudsman.

In July last year, a senior executive sent an email to around 30 staff at D365 Group.

In the email, leaked to news.com.au, the employee encouraged his colleagues to use up all their holiday leave and check they were receiving superannuation and that tax had been correctly paid.

The email read: “Please check to make sure that you are: Getting paid super, End of year tax has been paid and you can do your tax returns. Use all of your holidays ASAP …

“Get out while you can.”

David Wakeman, one of the employees who quit his job at the end of 2021, claims he’s owed $45,000.

“It’s really frustrating. I haven’t had to do this before,” Mr Wakeman said, who is owed the largest amount of money that news.com.au is aware of.

Another previous employee, James Turnbull, claimed to news.com.au that it was “well-known” among staff that if they resigned, they might be “stiffed” through not receiving their final wages, leave entitlements or superannuation.

“Whenever somebody left, they would get stiffed, they wouldn’t get their final several weeks’ pay,” he told news.com.au of his observations of several staff members. “The trick which was well known in the organisation was to leave right after a payday to minimise the amount you could get stiffed, which is ridiculous. I left right after a payday.”