Second Jump Swim entity in liquidation

By Nick Hall | 08 Jul 2019 View comments

JUMP! Swim Schools has been dealt another blow with franchisor Jump Loops Pty Ltd placed in court appointed liquidation. The Jump Loops liquidation announcement comes just weeks after alternate franchise entity Jump Swim Schools Services Pty Ltd suffered a similar fate.

At a Federal Court hearing on Friday, Registrar Claire Gitsham ordered that Jump Loops be wound up in insolvency under the provisions of the Corporations Act. Michael Yeo and Gess Rambaldi from Pitcher Partners were appointed as liquidators.

The Jump Loops liquidation and wind-up decision marks a notable development in the beleaguered franchise’s attempt to recover from a wealth of negative media attention.

The application had been ongoing since May, but was significantly bolstered when the Deputy Commissioner Of Taxation joined as a supporting creditor.

Jump Loops liquidation email

For franchisees, the Jump Loops liquidation and insolvency decision could have wide-spread effects.

In an email obtained by Inside Franchise Business sent to Jump Loops franchisees, the embattled franchisor revealed ongoing legal disputes had hampered operation.

“As you may be aware, the company has been under financial pressure over the recent months, and we were unable to meet the court’s requests in order to have the winding up application dismissed whilst we secured additional funding,” the email states.

“We will be working with the liquidator to assist in this process as much as possible”.

However, former JUMP! Swim Schools franchisee Shaun Trumbull said he isn’t confident duped franchisees will recover funds through the liquidation process.

The ex-northern beaches franchisee was one of the few to sign his agreements through franchisor Swim Loops, which entered voluntary administration in May.

“It doesn’t affect me directly, but it will certainly affect the existing Jump Loops franchisees,” he said.

“Out of the 82 unopened schools, the majority of them are under Jump Loops.”

Trumbull said the outstanding amount owed to Jump Loops made the task of fund recovery near impossible.

In June it was revealed that Swim Loops owed creditors more than $15m, much of which came from internal Jump Swim franchise entities.

“Given the fact that Jump Loops lent Swim Loops around $10m, I don’t see any of them getting anything back,” Trumbull said.

Jump Swim ongoing issues

With two of its major entities now being wound up in Federal Court, the decision places Jump Swim in a difficult position.

Just last week, the Federal Court ruled to have asset freezing order extended to cover foreign entities and transactions. The move effectively put a halt to a proposed Deed of Company Arrangement, further compounded by Friday’s decision.

Additionally, the company’s legal battle with the Australian Competition and Consumer Commission (ACCC) is ongoing, with a second Swim Loops creditors’ meeting to be held in the next 35 days.

As Swim Loops battles to survive voluntary administration amid $15m of creditor debt, the ACCC’s case against the franchisor is continuing to mount.