Despite a roll call of big name clients, and expansion to the US, where it employs 80 people, a report of initial information for creditors, prepared by liquidators Hall Chadwick, showed Reveal Group had a deficit of $6.7 million when its assets and liabilities were tallied.
The documents show the company owes staff $1.8 million in entitlements, and $6.4 million to creditors. These include NAB, which is owed a loan repayment of $4.25 million, $1.36 million owed to the Australian Tax Office, and well over $100,000 each to automation technology suppliers Blue Prism and UiPath, which were commercial partners of Reveal Group.
Company insiders, who spoke to The Australian Financial Review, said they had known of the company’s financial troubles, but expressed shock at its sudden demise, while its overseas operations have continued uninterrupted.
“The company was just ‘top-heavy,’ there were too many executives and too few revenue generating employees,” one former senior employee said.
“Also here in Australia, we were carrying a global support team for Reveal Group’s own products – a workforce management product called OpsIQ.
“In May to June last year, there was a round of redundancies to try to turn around the Australian business, but it wasn’t enough.”
Web of companies
One long-serving employee said Mr Crouch had always described Reveal Group as an Australia-based global company, whereas its demise revealed it had actually been set up in a complicated structure that enabled Australia to be shut down, with the Reveal Group continuing from New York, without responsibility for Australian debts.
”If you looked at the actual consultancy base the business was actually fairly profitable, but there were a lot of overheads on the Australian books,” said the executive, who requested anonymity.
“All of the senior executives globally were based here in Australia, and on the Australian payroll, so the North American business has been dressed up to be highly profitable, high growth and the cost has been born by Australia.
“There was anger and shock when everyone was fired because Ian had been talking about how profitable the US market is, and Australia basically funded that growth.”
Documents lodged with the Australian Securities and Investments Commission, show some senior Australian employees are owed well over $100,000. Adding to their sense of injustice, was that they felt let down, having agreed to forego salary during parts of the COVID-19 pandemic.
Final meeting
Staff and clients found out about the closure of Reveal Group on Monday, March 20. Staff were called to a 9am “all-hands” meeting in the Melbourne office, with consultants dialling in from clients’ offices.
The Crouchs had been based in New York since late last year, and in the weeks before the meeting Mr Crouch had informed partners in Melbourne of an expected acquisition by Talent International, which had subsequently been relayed to staff.
“On the Friday before the meeting, one of the things that we noticed in the office was that all the alcohol had been removed, and some items had started getting removed,” a former employee told the Financial Review.
“Then basically we came into the office on the Monday morning, and all of the artworks on the walls had gone, the coffee machine had gone, plus equipment like all the electronic whiteboards.
“The place had been stripped of things, so we knew that the news in the all-hands meeting wasn’t going to be positive.”
Staff were told they were being made redundant with immediate effect, and consultants on-site at clients’ offices were told to leave immediately and return their equipment to the office.
Complex structure
Reveal Group had started as an Australian tech software and consulting firm in 2005, with Mr Crouch’s contacts and reputation as a leading banking CIO, helping it win a swag of local clients, that included Westpac, Telstra and the Department of Finance.
It expanded to Canada in 2012, before establishing offices in New York in 2018. Various records show a web of different Reveal Group companies, incorporated by the Crouchs in Australia and internationally.
The surviving US operations, sit under a US-based holding company called Reveal Group Holdings in Reveal Group USA, which were both incorporated in 2020.
Meanwhile, the shuttered Australian company, Reveal Group, was officially listed as a fully owned subsidiary of Reveal Group IP, which is also owned and run by the Crouchs since 2015.
The principal place of business address for Reveal Group IP is the Crouchs’ luxury South Yarra home in Melbourne, which they bought for $7.6 million in 2013.
Out of 43 Australian employees 35 were made redundant in March, with the other eight people – including the Crouchs’ son, Simon Crouch, and their nephew, Zaid Crouch – being moved to work for a different operating entity called Reveal Group AUS, which was set up as a subsidiary of the US holding company, with Paula Crouch as its director.
“I think clients got the official notice from the liquidators and outstanding invoices, but they were left hanging,” a former Reveal Group employee said.
“There was no contact by Ian to the clients, it was left to consultants to communicate that they just had to leave.”
Hit hard by COVID
Asked about the Australian shutdown, and his handling of the closure, Mr Crouch said Reveal Group is a US-based business, which operates through subsidiaries in a number of countries, with the Australian subsidiary having accounted for about 25 per cent of global revenue.
He said the businesses globally had been hit hard by the COVID-19 pandemic, with Australia particularly suffering, and that the business had not been profitable since 2020.
“The magnitude of the losses incurred has been accelerating with each passing year,” Mr Crouch said.
“My wife and I have financed the business during this entire period while we sought to find a buyer.
He said a final extension of its banking facility was approved on the condition that he could sell the business by June 2023.
“Unfortunately, our business stalled during the 21/22 summer period. After three years of sustained losses, we reached a point where my wife and I were no longer able to continue to inject the considerable funds required to cover the company’s expenditures,” Mr Crouch said.
He said he and his wife had “intensely explored” negotiations to sell the company, for no financial benefit, to keep their staff employed together, but that had failed.
He said employees were paid up to their last pay run, and would receive payments under the Federal Employment Guarantee scheme. He said he was also aware of the responsibility of directors to ensure all superannuation entitlements are paid in full.
“The operations in the US is a completely separate business and entity and has been operating separately since its inception in 2018 – that has not changed. We have pulled out of Australia and have no intention of conducting the business of Reveal Group Pty Ltd in Australia in any form,” Mr Crouch said.
Hall Chadwick partner Richard Lawrence, said he was currently undertaking investigations into the affairs of Reveal Group Pty, and that the findings would be reported to ASIC and creditors in due course.
