ABC founder Eddy Groves stood up at a conference in Coolum a few years back and told delegates he could never compete with private childcare operators.
"He basically said that those people put their hearts and souls into running those centres whereas he operated a much larger model," one delegate who attended the conference at the Hyatt Regency said yesterday.
Herein lies one of the major problems which caused the dramatic unwinding of the Groves empire.
"Child care is a people business. ABC got to the state where it was controlled from a headquarters and it was like the McDonald's of child care," the delegate said.
"Child care is not McDonald's, it is about little children."
As the receivers McGrathNicol and voluntary administrators Ferrier Hodgson this week begin the arduous task of trawling through the accounts, they may wonder why Eddy didn't take a leaf out of his own book.
For like the late Chris Skase and Bernie Power, it was his Napoleonic-style expansion - and in Groves' case, like Skase, his march to the US - that stretched the company to its outer financial limits and contributed to its collapse.
For Groves, other factors helped, not the least of which was the poor record-keeping and lack of transparency in the accounts, particularly when talk turned to third party transactions.
"The accounts at ABC are an absolute mess," one insider commented yesterday, saying they were probably not dissimilar to some of those produced by Skase during the Qintex years.
It's understood the state of the accounts means it will take weeks for McGrathNicol and Ferrier to diligently work through them.
The receiver's first task is understood to be focusing 100 per cent on the core business.
A spokesman for McGrathNicol said it was far too early to tell where and how the Federal Government's $22 million bailout payment would be spent. "We will be working closely with the Government on the matter," was all the spokesman could say.
Other private childcare operators have expressed concern as to why the Government had supported ABC when the total viability of the business was not yet known and while other operators struggled currently.
Another major concern for ABC is recent changes to the new Child Care Management System, the system which operates the Government's childcare funding scheme.
Over the past six months, government childcare funding has gone from a monthly pay in advance system to a weekly pay in arrears system. The problem is that the transition to this new system has been a nightmare for most centres because instead of being paid weekly in arrears it now takes many weeks to receive the initial funding.
One very successful centre in regional Queensland went from a long-term positive cash flow situation to having to subsidise the centre by $20,000 for over a month.
It was too early for the receivers to know if the ABC centres had moved to the new Child Care Management System as yet but their cash flows would be heavily impacted if they had not.
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