Workspace One building company collapses into liquidation, ASX-listed City Chic must vacate offices

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If you saw them on the street, they would seem like a happy, completely normal Aussie family.

But Kathryn and Mike Arnold, in their 40s, have left behind an unhappy trail of creditors dating back decades.

The Sydney duo make quite the pair – Mike is bankrupt and has been banned from running his own company since 2014, while Kathryn is the director of a recently collapsed building firm.

In December, news.com.au reported that Workspace One Pty Ltd, which specialised in office refurbishments, had gone into liquidation with liabilities of $845,000.

ASIC records show that the liquidator accused the building firm’s sole director, Kathryn Arnold, of pocketing $861,000 in company money prior to its collapse – more than the sum total the business owed to creditors – and also noted there were suggestions her bankrupt husband Mike could have been operating as a “shadow director”.

Ms Arnold previously admitted to news.com.au she transferred money to a personal account to pay and reimburse herself for business costs and did not dispute the amount, but did deny that Mike was a shadow director.

Now, a news.com.au investigation has dredged up the couple’s fraught past, with one person still owed money from 2007, while it appears the married pair have relocated to NSW’s mid-north coast.

Meanwhile, the fallout from their failed company has just got messier, with an ASX-listed firm being ordered to vacate their offices while the construction boss is due in court over charges related to the controversy.

Workspace One’s liquidator, Liam Bailey of O’Brien Palmer Insolvency and Business Advisory, enlisted the help of the corporate regulator, ASIC, to pursue the missing Ms Arnold.

“We have sought the assistance of ASIC in obtaining the compliance of the director,” he told news.com.au.

Ms Arnold was charged with a civil offence of failing in her duty as a director, after months where the appointed liquidator could not contact her and with her location unknown.

A mention hearing took place at Sydney’s Downing Centre on January 16 but she did not appear and was excused.

The case has been adjourned until later this month, on February 20.

Workspace One had signed a multimillion-dollar contract with ASX-listed fashion company City Chic to renovate its offices in the Sydney suburb of Alexandria.

The project was left incomplete, and parts of the office are understood to be boarded up and unusable.

At the end of last month, the City of Sydney Council ordered City Chic to “cease use of the property” if they could not obtain an occupation certificate in the next 60 days.

A City Chic spokesperson claimed to news.com.au that this was an “administrative issue” from Workspace One’s collapse.

“City Chic is working with the certifier to provide the requisite paperwork,” the spokesperson added.

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It appears that the Arnold family have since moved to the mid north coast of NSW.

News.com.au has been supplied with a photo of Mr Arnold from October last year.

The picture was posted by construction firm Alurt Pty Ltd, which is headquartered in Woolgoolga, about 20 minutes north of Coffs Harbour.

A spokesperson for Alurt Pty Ltd appeared to confirm that Mr Arnold was an employee of the company.

“The photo attached is from the ‘Nozzie Cup’ raising awareness for mental health in the construction industry after we lost one of our close subcontractors to suicide last year,” the spokesperson said.

“Yes, Mike was in attendance along with many other employees, subcontractors, suppliers and representatives.

“We do not wish to comment further as the information you are requesting has no bearing on Alurt Pty Ltd and its operations.”

It comes as it’s emerged that a former landlord of the Arnolds has been left thousands out of pocket while a tradie is still owed money from before the Global Financial Crisis of 2008.

Gino Moscaritolo is owed more than $12,000 after the Arnold couple stayed at his rental property but skipped town without footing the bill.

Mr and Ms Arnold only paid one month of rent for the entire time they stayed at his Ryde property, in northwest Sydney, over the course of their seven-month tenancy.

“I’ve engaged a debt collector to try and salvage the loss of rent,” he told news.com.au.

The Arnold family moved into his two-storey rental in November 2022 and paid rent the following month.

Only Kathryn Arnold signed the lease.

Mr Arnold, a former carpenter, did not sign the lease. He has been an undischarged bankrupt for 10 years after failing to file a Statement of Affairs, and can only be released from bankruptcy if he does so.

News.com.au made multiple attempts to contact Mr Arnold’s bankruptcy trustee, Andrew Barnden of Rogers Reidy, for comment.

Within a month of moving in, the couple stopped paying rent, claiming they were suffering from heat stroke from a broken air conditioning unit and wouldn’t pay any more money.

This led to a protracted battle in the NSW Civil and Administrative Tribunal (NCAT).

In the end, according to NCAT documents supplied to news.com.au, the tribunal ordered Kathryn Arnold to pay back $12,600 to her landlord and for her and her family to leave the premises by June 29.

To date, the money has not been paid back.

Then there’s Neale Perkins of Sydney glass and mirror company Excel Glass, who was left out of pocket in 2007 over an unpaid debt from Mr Arnold.

Mr Perkins told news.com.au his daughter was friends with the Arnolds and “we sort of knew them socially”, and was even invited to their wedding.

So he agreed to do some work for them. Years later, he now regrets this decision.

Mike Arnold was “a talker ,” according to Mr Perkins.

He added that it “wasn’t a small amount of money” and was a couple of thousand dollars he is still owed.

News.com.au also spoke to a current creditor caught up in the recent collapse of Workspace One, James*, owed a staggering $270,000.

Eddie*, who wanted to remain anonymous, works in electrical services and was under the impression that Mike Arnold was running Workspace One.

“Little did we know, Mike’s got … (a) bad track record,” he said.

Later, he learned that Mike’s wife Kathryn was running the company.

Eddie is not the only one to make that mistake – the liquidator alleged in documents submitted to the corporate regulator that there was a possibility Mr Arnold was operating as a “shadow director” as he was “intimately involved” with Workspace One.

Meanwhile, another creditor who previously spoke to news.com.au, Jackson*, left $120,000 in the hole over the debacle, also believed Mr Arnold was the boss.

“I never met her (Kathryn Arnold). He (Mike Arnold) was basically project manager, he was running all the trades, he was basically the man, everything was him,” Jackson told news.com.au.

“She only came into the picture towards the end when everyone started to get really angry.”

Ms Arnold previously denied that her husband was running the show.

“Unfortunately there are not many women in the construction industry and many of the trades and even clients failed to acknowledge me as the director of the business or take my position seriously,” she said. “Whilst the project manager is indeed my husband, his role was to manage the day to day operations of the project and he acted only in this capacity.”

In a report submitted to the corporate regulator, Workspace One’s liquidator Mr Bailey wrote: “I have identified 193 payments for amounts totalling $861,040.79 made to a bank account … (which) I have determined the payments were most likely made to a bank account in the name of the director”.

Ms Arnold told news.com.au she transferred money to a personal account to pay and reimburse herself for business costs and did not dispute the amount.

“Generally speaking and simply put, I drew wages, director’s fees and reimbursement for extensive costs put through my personal credit card over the lifetime of the business,” she said.

She did not respond to requests for comment in regards to the new allegations. News.com.au also asked her to pass on questions to her husband, but no response was received from him either.

alex.turner-cohen@news.com.au

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