Creditors of a restaurant chain that includes Madam Woo, Hawker and Roll, and Rāta Dining get to have their say on the future of the business this Friday.
Malcolm Hollis and John Fisk of PwC were appointed administrators of Go To Collection in November with the directors of the companyciting Covid-19 and an “extreme shortage of staff” as the issue.
Hollis said a deed of company arrangement (DOCA) will be presented to the company’s creditors, which they will either accept or reject at the meeting in Auckland on Friday.
Hollis said Go To Collection currently had four outlets, including Rāta Dining, Madam Woo in Queenstown and Hamilton, and “a central kitchen” in Onehunga.
He said if the proposal was accepted, subject to a vote, creditors will receive a payout on each of their individual claims.
“Depending on the nature of the claim, they will receive between all of their money or some of it,” he said.
“I’m optimistic they will accept it but you never know.”
The Herald reported last year that Go To Collection had gone into voluntary administration “to try and rehabilitate and restructure the business to avoid an alternative process such as liquidation”.
Hollis said if the current DOCA is accepted, he expected all Go To Collection employees to be paid what they are owed in full, while Inland Revenue and trade creditors will receive partial payment of money owed. Minor creditors of less than $1000 will also likely be paid in full.
“As part of the arrangement, the landlords from the closed sites will receive three months’ rent and settlement,” Hollis said.
“In that way, we’ve been able to determine the quantum of those landlords’ claims, which could have been quite large.”
He said Go To Collection has four outlets that are being sold to the existing shareholders.
PwC administrator Malcolm Hollis says Go To Collection's watershed meeting should be positive for the company. Photo / Supplied
“It’s effectively what we call a ‘hive down’, but at the same time they are taking over some of the bank debt and they are putting cash in.”
Hollis said this means the bank is most likely to continue to support the needs of the new business, and creditors will all receive a distribution.
“It’s a very good arrangement,” Hollis said.
If the DOCA is not accepted, Hollis said creditors will sell the outlets to the same parties but warned that creditors were unlikely to receive anything.
He said since his appointment all Hawker and Roll outlets and others have been closed, including Hawker and Roll Sylvia Park which “wasn’t trading as well as we’d hoped”.
Hollis said the other outlets have been trading positively however, the struggle to find and retain staff continued.
“It’s a recurring problem everywhere and our challenge at the moment in administration is to find new staff. Nobody logically would want to come and work for a company in administration,” he said.
Fleur Caulton, chief executive of Go To Collection, the owner of Madam Woo. Photo / Supplied
Major stakeholder Fleur Caulton told the Heraldlast year that immigration issues have been creating major staffing issues for the company.
Caulton said Covid-19, labour shortages and “fraught visa application processes” had taken a significant toll on the business.
When asked how Friday’s meeting is likely to turn out, Hollis said: “I do think the likely outcome is that the DOCA will be accepted by the creditors.
“Then the company will enter into its arrangement and will come out of administration, where we will have about a month to pay out the creditors if they accept it.”
He said an accepted DOCA will return the company “to normal” and the company will be in a financial position to pay back its creditors.
He said with ongoing support from current shareholders, the company will have positive cashflow trading and no longer have the large liabilities it had before, “particularly around all those onerous leases”.
Hollis said a restructure will put the company “in a much better position to trade more profitably going forward”.
He said some well-known shareholders including TV chef Josh Emett are no longer involved with the company.
“I think that’s allowed people to look forward now and put the past behind them.”
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