Loss adjuster Cerno has been forced into voluntary administration after merging with claims services specialist Stream Group. 

Stream Chairman Christian Bernecker told insuranceNEWS.com.au a “stalemate” with a number of former Cerno shareholders has forced Cerno’s directors to take the action.

Cerno staff are now working under the Stream brand, and most former Cerno shareholders have been issued Stream shares after agreeing to the arrangement late last year.

Mr Bernecker says Cerno was formed in 2011 from the merger of the former Australian business of McLarens Young International and Freemans Australia.

“Through this merger process, a number of shareholders contributed working capital and became debt-holders of Cerno Ltd,” he said. “The intention had been that Cerno would repay these debts swiftly after the merger, but Cerno never had the financial capacity to do so due to its poor financial performance. 

“A significant amount of effort has been put into trying to achieve a resolution on this issue, given these initial loans arose from the [original merger].

“However, a number of key debt-holders have not been willing to resolve the situation.”

He says the decision to put Cerno into voluntary administration follows the finding that “no further funding could be secured for the business”.

“It was made clear to them that without a resolution on this issue, it would be difficult to maintain Cerno Ltd as an ongoing entity due to the need for ongoing funding from external parties,” Mr Bernecker said.

A significant number of the remaining major debt-holders “have been unwilling to engage in negotiations to achieve an outcome relative to the situation. Legal action was commenced by one significant debt-holder, who has maintained this course over the past six to nine months.”

Many of the debt-holders who rejected the offer now work for competitor companies. 

Stream CEO Paul Lynch told insuranceNEWS.com clients have been kept fully informed of all developments.

“We have worked closely with all our clients to ensure there is no disruption in respect of service delivery as part of the ownership transfer.” 

He says following completion of the merger earlier this month, 25 staff will be affected as the company moves to cut duplicate roles. The roles are “mainly in support functions”.