Allegations of financial mismanagement linked to collapse of Genius Childcare

Administrators investigating the collapse of Genius Childcare have alleged that financial mismanagement by director Darren Misquitta may have contributed to the organisation’s downfall. The collapse has placed 25 early childhood education and care (ECEC) centres into administration and left creditors owed an estimated $115 million.

Genius Childcare, operated through Abacus 49 Pty Ltd and Vertical 4 Pty Ltd, entered external administration in March 2025 under the management of WLP Restructuring. The affected centres span Victoria, Western Australia, New South Wales, Queensland and the ACT, with several sites yet to open at the time of administration.

According to WLP Restructuring’s Administrators’ Report to Creditors, the companies experienced significant cash flow issues, including unpaid wages to education staff and outstanding payments to service providers. Some centres, including Taylors Lakes in Victoria, were forced to temporarily close.

The report alleges Mr Misquitta may have breached multiple duties under the Corporations Act, including:

• failing to remit tax and GST
• trading while insolvent
• withholding required cash reserves
• failing to maintain proper financial records

It further alleges that financial accounts had not been externally audited since 2022 and that subsidiary Abacus 49 may have been insolvent from its inception. Journal entries reportedly included unexplained transactions, such as a $90 million withdrawal recorded as “goodwill”.

Administrators also allege that funds were transferred from group agreements and not recovered, and that the group continued trading while insolvent since early 2021.

WLP Restructuring has referred the allegations to the Australian Securities and Investments Commission (ASIC), which has the authority to initiate criminal proceedings if breaches are confirmed.

The companies reportedly owe more than $2.3 million in unpaid superannuation to employees. The Australian Taxation Office has submitted claims totalling $4.9 million against Vertical 4 and $1.15 million against Abacus 49. Total liabilities are estimated at $80.4 million for Vertical 4 and $35.1 million for Abacus 49.

While some centres have closed, including those in Mandurah (WA) and Taylors Lakes (VIC), funding has allowed other services to continue operating during the administration period. Negotiations are ongoing for the sale of 10 trading centres to Shared Beginnings, while discussions with potential purchasers continue for the Newcombe centre in Victoria.

This article is based on reporting from The Advertiser.