Background
Fast Fresh Retail Ltd ran a chain of food retail businesses. They were hit by the first wave of COVID-19 in 2020 which had reduced revenue not only in the immediate term, but also long term (by up to more than 30%) as CBD and other workers embraced work from home life and reduced the number of convenience meals and lunches purchased.
The company also had a debt with IRD that they were unable to negotiate out of. This left the company with few options apart from voluntary liquidation.
Our appointment
We reviewed the company’s options and realised that the board wanted to retain the company if possible as part of its broader operations. Liquidation is very much a one-way street, as it is rare and difficult to get a company back once it has been liquidated.
This was a case for voluntary administration. It is possible for the company’s creditors to vote for a Deed of Company Arrangement (DOCA) and then pass control back to the board.
Deed of Company Arrangement
We were appointed as administrators and then set about 1) holding the 2 creditor meetings required and 2) valuing the business and putting together a DOCA for the creditors to consider and vote on that was better than a straight liquidation.
The board was willing to contribute funds to support the DOCA over and above the asset value of the company. It seemed to be a win-win.
The DOCA passed with most creditors voting to support the compromise. This included the IRD. We had worked hard to engage with the IRD early and transparently as their support was essential to the DOCA passing.
The creditors are now being paid by the deed administrator, the company is back under control of the board and a liquidation has been averted. Company’s that can be saved, should be saved and this is something that Waterstone firmly believes in.
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