How a creditor-supported restructuring preserved regional childcare centres, protected jobs and delivered a materially better outcome than liquidation.

The restructuring of the Believe Early Learning businesses is a practical example of what voluntary administration can achieve when a childcare operator has viable services but an unsustainable financial structure. The process preserved operations in Eaglehawk and Mooroopna, protected the regulatory and workforce platform on which value depended, and produced a materially stronger outcome for creditors than an immediate wind-down. It also offers a timely case study for accountants, solicitors and financiers advising a sector facing simultaneous growth in demand and pressure on capacity.

A Sector of Strong Demand — and Uneven Economics

Australian early childhood education and care is moving towards broader access. From 5 January 2026, the Australian Government’s 3 Day Guarantee replaced the previous Child Care Subsidy activity test and guarantees Child Care Subsidy-eligible families at least 72 hours of subsidised care per fortnight, regardless of activity levels. The reform supports participation, but it also increases the need for services, places and educators. The Productivity Commission continues to identify accessibility, affordability, quality, inclusion and equitable availability as central challenges in building a more universal system.

Supply is not keeping pace evenly. Victoria University’s 2024 mapping found that around 24 per cent of Australians lived in childcare “deserts”, defined as areas with more than three children for every childcare place, while approximately 700,000 Australians had no access to childcare. Although access improved nationally between 2020 and 2024, growth was weaker in remote and very remote locations than in metropolitan and major regional areas. For communities such as Eaglehawk and Mooroopna, the continuity of an established centre therefore carries economic and social value well beyond the balance sheet.

Workforce remains the binding constraint. Jobs and Skills Australia’s national capacity study found that a substantial uplift in the early childhood workforce is required to meet present and future demand, with attraction, retention, training and geographical distribution all requiring attention. Government support has improved the position: the Worker Retention Payment funded a 15 per cent wage increase, and in June 2026 the Commonwealth committed a further $3.6 billion to extend the program to 30 June 2028. Yet providers must still manage award compliance, qualification ratios, leave coverage, agency costs, fee caps and the practical difficulty of recruiting experienced educators, particularly outside major cities.

The result is a difficult operating equation. A centre can have strong enrolment demand and still experience cash-flow distress because labour is its largest and least flexible cost, regulatory obligations cannot be deferred, and occupancy can be constrained by staffing rather than family demand. Higher wages are necessary to improve retention, but the transition creates working-capital and compliance pressures. Rent, insurance, utilities, food, technology and governance costs add further strain, while fee growth conditions attached to workforce support limit the extent to which costs can simply be passed through to families.

The Believe Restructuring

Administrators Andrew Blundell and Chris Bergin were appointed to the Believe Group on 10 April 2026. The Eaglehawk and Mooroopna centres continued to trade while the Administrators assessed restructuring options and engaged with employees, secured creditors, regulators, landlords and other stakeholders. Continued trading was fundamental: closing the doors would have risked staff departures, family withdrawals and the loss of the operating platform required to preserve value.

A proposal concerning Believe Early Learning Eaglehawk Pty Ltd, Believe Early Learning Mooroopna Pty Ltd and First 7 Years Pty Ltd became the basis of a Deed of Company Arrangement. Secured creditors were refinanced and paid in full, employee entitlements were protected, and the centres continued as going concerns. Approved provider status and service approvals were preserved, avoiding disruption to children, families and the surrounding communities. Unsecured creditors were provided a dividend of at least 50 cents in the dollar, materially exceeding the anticipated liquidation outcome. The DOCA was fully effectuated on 18 August 2026.

Why Voluntary Administration Suits Childcare Restructuring

ASIC describes voluntary administration as a process intended to allow an insolvent company, or as much of its business as possible, to continue in existence or, if that is not possible, to achieve a better return for creditors than immediate winding up. That purpose is particularly relevant to childcare because the most valuable assets are often interdependent and intangible: provider and service approvals, trained staff, established enrolments, compliant premises, leasehold positions, operating systems and community trust.

Voluntary administration creates a controlled period in which the business can continue trading while its financial position is independently investigated and alternatives are tested. A DOCA can then bind participating creditors to a tailored commercial solution. In a childcare context, that flexibility may allow secured debt to be refinanced, legacy liabilities to be compromised, new capital to be introduced and employees to remain engaged. The process also provides creditors with comparative information and a vote on whether the proposal is likely to outperform liquidation.

The distinction between preserving an operating centre and selling disconnected assets is critical. Furniture, play equipment and fit-out may have modest forced-sale value. The enterprise value lies in the combination of approvals, people, enrolments and premises. Once staff and families disperse, rebuilding that combination can be slow, expensive or impossible. The Believe outcome demonstrates that a timely appointment can protect this going-concern premium and redirect it towards creditors, employees and service continuity.

Lessons for Advisors

Advisers should not assume that a full centre or long waiting list means a client is financially secure. Warning signs include persistent tax or superannuation arrears, delayed creditor payments, reliance on short-term funding, inability to meet payroll without owner support, deteriorating staff retention, covenant pressure, mounting related-party balances, or sustained losses despite acceptable occupancy. Operational indicators — rooms closed because ratios cannot be met, heavy agency use, compliance concerns or landlord disputes — may be equally important.

Early engagement materially expands the available options. It allows time to validate centre-level profitability, separate viable services from structural liabilities, forecast cash requirements, engage financiers and landlords, protect approvals, and prepare a credible recapitalisation or sale strategy. By contrast, a last-minute appointment may leave insufficient liquidity to trade and may cause employees and families to move before value can be protected.

Accountants, lawyers and financiers with childcare clients should encourage directors to seek specialist restructuring advice as soon as pressure emerges — not after payroll, tax or regulatory obligations have become unmanageable. A confidential options assessment may identify an informal turnaround, refinancing, sale, safe-harbour strategy or voluntary administration. Where the underlying service is viable, decisive action can preserve essential community infrastructure, maintain employment and deliver a better result for creditors. Believe Early Learning shows that the objective is not merely to manage insolvency; it is to preserve a functioning childcare business before its most valuable assets walk out the door.

Call to action: If a childcare client is experiencing cash-flow, workforce, creditor or compliance pressure, early specialist engagement can preserve options and enterprise value. Contact Cathro & Partners for a confidential restructuring assessment.

Sources and further reading

• Australian Government Department of Education, “3 Day Guarantee” (updated 1 June 2026)
• Australian Government Department of Education, “Worker retention payment” and extension announcement (17 June 2026)
• Productivity Commission, Report on Government Services 2026, Early childhood education and care (updated 3 June 2026)
• Jobs and Skills Australia, The Future of the Early Childhood Education Profession (3 September 2024)
• Mitchell Institute, Victoria University, International childcare: Mapping the deserts (2024)
• ASIC, Report 836, Review of voluntary administration and deed of company arrangement process: 2021–2025 (July 2026)