A South Australia-based potato company has collapsed, with its assets now up for sale, following debts in excess of $40 million after a widespread drop in value for potato prices during 2011-12.
Corporate advisory firm McGrathNicol has been appointed as receivers and managers to Mondello Farms Group, a wholesaler of processed potatoes, and Heard Phillips is handling the administration investigations.
Administrators Anthony Phillips and Andrew Heard were appointed to the farm on March 19, 2013.
Investigations from the administrators have revealed the massive debt of $40 million, which Phillips told SmartCompany is owed to secured and unsecured creditors. The major creditors are financiers, farmers and suppliers.
Mondello Farms is likely to have collapsed after it struggled to recover from operating losses in 2011-12.
“It is too early to determine all the reasons for Mondello Farms failure, but it is noted that the company was under-capitalised and had incurred significant operating losses from which it was not able to recover when industry prices for potatoes fell in 2011/2012,” Sam Davies from McGrathNicol said in a statement.
According to an advertisement placed in The Australian Financial Review today, the business specialises in the “growing, washing, packing and marketing of potatoes” and was established in 1994.
Phillips says the business was “sizeable” and when he was appointed, there were approximately 150 staff employed across its South Australian and Victorian operations.
It is understood McGrathNicol is attempting to maintain the status quo of the business while the assets are up for sale and there are no planned job losses. SmartCompany also understands there is considerable interest in the company.
Assets up for sale include a packing shed, over 3000 hectares of owned horticultural land and associated water licenses across seven properties, a range of potato growing, marketing and distribution rights and other intellectual property.
The Federal Court has granted permission for the time frame for the second meeting of creditors to be extended and Phillips says it’s likely to be held toward the end of July.
Currently, Phillips says, there are a “significant number of transactions under investigation and all the details will be reported to the creditors prior to the second meeting”.