The parent company of Burger King in New Zealand has been placed into receivership.
Grant Graham and Brendon Gibson of KordaMentha were appointed receivers for the business, which operates 83 stores around the country and employs more than 2,600 staff.
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Burger King restaurants have been closed as part of the level four lockdown in response to the Covid-19 pandemic.
Gibson said this has had a significant impact on the business in New Zealand.
The receivers will now seek support from suppliers and landlords to possibly restart the business once the lockdown is lifted.
Gibson said the senior management team remains committed to the business and is working on a plan to reopen after the lockdown.
The Burger King shareholding companies in receivership are Tango Finance Limited, Tango New Zealand Limited and Antares New Zealand Holdings Limited.
In a letter addressed to staff, Burger King chief executive Michelle Alexander said that inability to earn revenue had created significant financial challenges for the company.
"As you know we have applied and received the Government wage subsidy, and this is assisting to pay all staff during the lockdown, however with no sales since lockdown commenced, the Company does not currently have the cash flow to fund trade creditors and rent payments," Alexander said.
She said there was a high degree of uncertainty to when the lockdown would end and how quickly the economy would recover.
In this context, she said that the Burger King shareholders had decided not to put any additional equity into the business.
While the company is listed under Tango and Antares in New Zealand, the overarching business is owned by US-based private-equity firm Blackstone.
Blackstone paid close to $108m in 2011 for the franchise, which was then made up of 75 restaurants. This has grown to 83 today.
Alexander explains that the aim of putting the business into receivership is restart the business and then find a new owner.
"We believe that this is the best way forward for the business and are committed to finding a new owner who is confident in the long-term prospects of the Burger King business in New Zealand," she said.
Alexander assured staff that these developments would not affect their terms of employment and that they would stay on at least 80 per cent of their usual earnings.
Burger King has operated in New Zealand since 1993, competing in a cluttered burger market occupied by the likes of McDonald's, Wendy's, Carls Jr, Burger Fuel and a number of other smaller firms.
The question now is whether the burger chain will be able to find a buyer in the local market.
In March last year, Blackstone appointed Craigs Investment Partners to find a buyer for the business.
By the time Covid-19 hit, the company was still not able to find a buyer, which is estimated to make around $20 million each year.
Given the current market conditions and the uncertainty surrounding trading conditions, it will likely prove even more difficult to find a buyer now.