The owner of the embattled nationwide childcare networks Porse and Rainbow Corner is facing liquidation.
Inland Revenue filed an application to put The Rainbow Corner Group (Porse’s parent company) and three subsidiaries into liquidation on March 2.
Previously owned by Evolve Education, Porse has around 1000 in-home child educators contracted around the country.
The business was purchased by Rahul and Bhavini Doshi’s Rainbow Group in early 2019 and has looked to restructure and cut costs in the business since.
The Doshis founded Rainbow Group in 2012, growing the business to 18 preschools across New Zealand with two more locations in the works according to its website.
Two locations, Christchurch and Blenheim, have been closed by the ministry.
“This case is an unfortunate reminder of the poor state of the early childhood education funding system and the urgency required to fix it. The current ‘high trust’ model is clearly not working.”
– Mark Potter, NZEI Te Riu Roa
Figures held by the Education Review Office show Rainbow Corner place more than 500 children on Rainbow Corner’s roll nationwide.
Cracks started to emerge for the childcare empire towards the end of 2022 when the Ministry of Education began suspending or cancelling Porse’s licences.
The ministry’s acting leader of operations and integration Martin Hillier said three Porse licenses are suspended in Southland and Whangarei, while “a number” of licenses had been cancelled in Auckland, Christchurch, Wellington, Hawkes Bay and Bay of Plenty.
Hillier said the ministry had identified non-compliance in governance and management, causing it to cancel and suspend licences.
Rainbow Corner and Porse together received more than $3 million in wage subsidies and $8m childcare funding through the government.
The business has been having issues paying staff on time and took months to pass on pay rises secured through the Ministry of Education’s pay equity initiative.
NZEI Te Riu Roa president Mark Potter said said the union had been engaged with Rainbow Corner staff was concerned about a lack of accountability and transparency and control around early childhood education funding generally.
“Specifically, we have concerns that not enough is being done to ensure pay parity funding is being passed onto teachers.
“This case is an unfortunate reminder of the poor state of the early childhood education funding system and the urgency required to fix it. The current ‘high trust’ model is clearly not working.
“We call on the government to make good on its commitments in the Early Learning Action Plan to address funding transparency to ensure money going into early childhood education is used to provide quality education for tamariki, and not as a profit-making exercise.”
Big four accounting firm PwC is looking into Rainbow Corner, though it is unclear whom they were appointed by. Hillier said the ministry was committed to working with the auditors to understand its financial situation.
At the end of January, Stuff reported that Porse had been sold to relatively small Chinese centric in home education provider No-1 Homecare in the past few weeks, though the Companies Register still shows it under the ownership of Rainbow Corner and the Doshis.
Newsroom understands the sale is still in progress.
Hearings to determine the future of the companies are scheduled in the Auckland High Court later this month.
Inland Revenue declined to comment on its bid to liquidate the businesses.