RACQ Insurance says it could be up to $10 million out of pocket following the winding-up of former home repair partner Stream Group Australia.

As revealed in an insuranceNEWS.com.au Breaking News report on December 17, Stream was forced into voluntary administration on the previous day, and at a second meeting of creditors last week the decision was taken to liquidate the company.

“RACQ is working with the administrators and believes it will incur losses of about $5 million to $10 million due to the decision to focus on ensuring builders were paid and members’ repairs were completed,” a spokesman said.

It says there will be no “discernible delays” for customers and Stream’s collapse will not cause a rise in premiums.

Administrator FTI Consulting says in its report, seen by insuranceNEWS.com.au, that Stream may have been insolvent as early as June 2014, although further investigations are required.

It also says RACQ funds provided for Stream to administer insurance claim payouts may have been used for other purposes.

FTI found the company’s financial difficulties could be attributed to poor strategic management, an inability to collect outstanding debts, lack of working capital and a dispute with a major customer.

Creditors are unlikely to receive any payment, it says.

Stream founder Don McKenzie told insuranceNEWS.com.au today the liquidation has left him “devastated”.

“While I have stepped down from the group, I will work with the administrators and liquidators to achieve a swift resolution,” he said. “While the administrator’s report makes a number of comments, the administrator clearly points to a high-level review only, due to timing constraints, using extremely basic metrics.

“I will wait until the completion of liquidation reviews to make a broader comment on Stream Group Australia.

“However, for the record, I disagree with a number of aspects of the report, which I have raised with the administrators and will be resolved during the liquidation process.”

In October insuranceNEWS.com.au reported that Stream’s auditors had drawn 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.

Stream’s UK and New Zealand operations are not affected by the collapse of the Australian company.