Claims services company Stream Australia has been placed into voluntary receivership.

The company’s board made the move yesterday following the failure of a capital-raising.

Around 70 staff have been retrenched with immediate effect.

“It’s very sad, but there’s no alternative,” Chairman Larry Case told insuranceNEWS.com.au. “There’s a lot of very competent people affected.”

Mr Case says potential investors’ commitments were contingent on Stream Australia being able to extend its existing contract with its largest client, which is understood to be RACQ Insurance.

In a statement to the Australian Securities Exchange late yesterday, Mr Case said the contract has not been extended. Following professional advice, the company was then placed into administration.

Stream founder Don McKenzie has resigned from the board.

In October insuranceNEWS.com.au reported that Stream’s auditors drew attention to a net loss of $12.7 million in the year to June 30, with current liabilities exceeding current assets by $9.75 million.

Mr Case said at the time that writing off investments in failed loss adjuster Cerno and Melbourne Technology Group accounted for $7.8 million of the loss, and start-up costs for the UK operation were $2.4 million.

The New Zealand company is now “a viable business that’s doing well”.

He says Steam UK is also operating well after taking longer than expected to become established. But the recent UK floods have led to “a huge increase in turnover”.

The UK business has also brought in a “European-based” partner, who paid £200,000 ($415,510) for a 34% share in the operation.

“This makes the UK operation entirely self-funding and also gives us a partner who lives in the time zone,” Mr Case said.

Mr Case places the blame for the failure of Stream Australia “entirely on Cerno”, which only became part of Stream in February after a protracted takeover. It was placed into voluntary administration a few weeks later after Stream failed to reach agreement with Cerno shareholders.

“It was one of those things where you think you had the resources to turn it around, but we didn’t.”

John Park of FTI Consulting has been appointed as the administrator of the company. The company’s ASX statements says the suspension of trading in Stream securities will probably be lifted “over the coming days”.