The manufacturing arm of the Byron Bay Cookies has been placed into voluntary administration.
The 23-year-old Australian gourmet biscuit producer turned over $13 million last year and has partnerships with a number of major airlines.
Byron Bay Cookies had just announced franchise expansion plans last week to add to its offices in the UK and the US and six retail stores across Australia, including four franchisee-operated concession stores located within David Jones food halls in Sydney, Melbourne, Adelaide and Perth.
But the business then received a court notice from the Australian Taxation Office requesting it wind up the manufacturing arm of its business due to tax debts. John Vouris and Brad Tonks of Lawler Partners were appointed as voluntary administrators on March 7.
According to the administrators, Byron Bay Cookies owes $2.7 million to unsecured creditors along with further amounts to its secured creditors, the NAB and St George Bank and entitlements owing to its 70 employees.
The employees are owed holiday pay, long service and redundancy payments and the administrators have already let 12 employees go.
Vouris told SmartCompany the retail arm of Byron Bay Cookies continues to trade as normal.
“It is in a different entity so we have no control of that unless there is some money owed,” he says.
“We haven’t finished our investigation but there are some trade losses that have been incurred and the company is in the throes of a dramatic reorganisation.”
Vouris says the ATO is owed $1.3 million over “a considerable amount of time” for payments of PAYG tax, GST, and fringe benefits tax while suppliers of raw product are owed $1.4 million.
Byron Bay Cookies’ directors are currently sitting down to propose a deed of company arrangement and the first meeting of creditors will be held in Sydney on March 19.
“Without a deed of company arrangement creditors are looking at not receiving a distribution, as I can’t imagine the value of the assets being as high as what is owed to the secured creditors,” Vouris says.
“We are advertising the business as a going concern and if a deed of company arrangement is not successful, there will be a liquidation which would be disastrous for all parties.”
This story first appeared on SmartCompany.