The latest report by insolvency practitioners WPL into companies Vertical 4 and Abacus 39, which between them ran 37 Genius daycares around the country, contains allegations that Vertical and Abacus traded while insolvent and that Abacus had never been solvent.
Other alleged breaches, which the administrators say they have referred to ASIC, include withholding GST and tax payments and failing to keep sufficient cash reserves or proper business records. The administrators are also worried about large sums of money they allege Misquitta took out of the businesses in the form of loans to other companies he controlled, which were subsequently written off.
In June 2024, Vertical was owed more than $21 million by eight other Misquitta-controlled entities, but when the administrators took over the company eight months later, they say, they found the debts had been wiped without any evidence of the money being repaid.
The administrators said the money would likely be pursued in the course of a liquidation process if creditors choose that course of action when they meet again in October.
WPL identified millions withdrawn from Vertical by its director Misquitta, as well as his failure to meet its tax obligation, as leading directly to the group’s collapse.
“The director, through multiple related entities, withdrew significant cash from the business over
the period from [July 2021] to [March 2025], leaving the group in a position where it was unable to pay its tax liabilities, trade creditors, employee wages and superannuation,” the administrators wrote. “As a result of the above, we are of the view that the director’s actions have caused the failure of the group.”
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WPL also noted there might be cause for action against Misquitta under section 598 of the Corporations Act, which enables courts to order compensation against individuals who have caused harm to a company through their fraud, negligence, or breach of duty.
The businessman did not respond to a request for comment on Thursday, and ASIC said it would not comment on individual matters.
Creditors of another Misquitta-controlled childcare company, Horizontal 1, were advised in February by liquidator Paul Vartelas that he believed Misquitta, as company director, had breached his statutory obligations by allowing the company to accrue debts while already insolvent.
“It is my view that the director breached his obligations … by allowing the company to trade while insolvent,” Vartelas wrote in a report to creditors which has also been lodged with the corporate regulator.
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