How food packaging business Multipack NZ ended up in liquidation

The business packaged food including couscous, spices and rice. Photo / Getty Images

A food packaging company suffered when its biggest meal-kit client’s business dropped 40 per cent and there were multiple errors and poor quality control.

The first liquidation report on Multipack NZ explains how the food packaging business faced calamity after an operating system change backfired.

Steve Lawrence and Chris McCullagh of PKF Corporate Recovery & Insolvency are assisting Australia’s Grahame Ward of Mackay Goodwin on the insolvency of Multipack NZ.

Ward was appointed administrator and subsequently the liquidator of the New Zealand company estimated to have liabilities of $771,000 including $330,000 owed to creditors.

Multipack NZ supplied packaged dry goods for meal kits. Those goods included spices, rice and packaged cheese.

The company was fully owned by an Australian company, Multipack NSW Pty.

It had a sub-tenancy in the premises of an unrelated food packaging business. It owned a packaging plant and equipment, which was operated by third-party contractors.

That plant was in Auckland.

The company’s inventory was stored at the premises here and orders were prepared and dispatched by those contractors.

The liquidation report said director Frank Jan van den Berg of Australia outlined why the company struck financial difficulties.

“From January 2023 the operational site changed from running a relatively low platform to a much larger facility allowing us to have dedicated production rooms and more storage space with a view to build stock,” he said.

The aim was to ensure greater profit margins.

Disastrous overhaul

“Further, we implemented an extension of our operating system which should have made the whole system more reliable. However, difficulties with daily input functions and accuracy of these entries caused greater inefficiencies making the operations run at a loss,” van den Berg said.

The company suffered increased poor performance, including from late and/or non-deliveries, errors in pack coding and overall poor quality of packs, he said.

This caused its main unidentified client to review its supply chain, “with the likely outcome that we would lose even more work”.

He added: “Our main client also dropped 40 per cent in volume and uptake in new clients was virtually non-existent. Debt levels kept rising, profitability kept falling which resulted in the operation running at a loss.”

The liquidation report didn’t name the main client.

Because the company was not in a position to order new stock, it could not satisfy customer orders in full.

Several key contracting staff resigned or went on extended leave during the administration period. After about three weeks Ward decided that it was uneconomical to continue trading.

Packaging operations ceased on May 2 and the business could not be sold as a going concern.

“We arranged the sale of a portion of the company’s bulk stock comprising rice and couscous. Another portion of bulk stock was returned to its supplier,” the report said.

Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.