01 Dec Voluntary administration of a cafe chain: Passiontree Velvet
Capability: Insolvency
Industry: Hospitality
Appointment: Voluntary administration and deed of company arrangement
Overview
Passiontree Velvet, a chain of cafes trading across New South Wales, the Australian Capital Territory and Queensland, was placed into voluntary administration. The business kept trading throughout, and the company was recapitalised so that it could continue in existence.
Challenges
- The stores were spread across three jurisdictions, with about 50 employees relying on the business continuing to trade.
- The cost base had to be reduced quickly, without interrupting trade at the stores.
- Landlords and other key stakeholders each had their own exposure, and needed to be kept informed.
Our approach
- Traded the business on through the administration, so the stores stayed open and staff stayed employed.
- Managed a team of about 50 employees across the stores in NSW, the ACT and Queensland.
- Reduced the cost of operations to put the business on a sustainable footing.
- Liaised with the landlord and other key stakeholders to keep disruption to a minimum.
- Worked towards a restructure through a deed of company arrangement.
Outcome
The company was successfully recapitalised and continued in existence, with the business restructured through a deed of company arrangement.
How this applies to your business
If a hospitality business is behind on rent, wages or tax, voluntary administration can hold creditors off while a proposal is put to them. Depending on the circumstances, small business restructuring may be the better fit for a smaller company. Our registered liquidators can talk you through which applies. The first consultation is free and confidential.
Outcomes depend on the circumstances of each business and on creditors accepting the plan.
