Delay likely on N.Z. Food

Press, 12 July 1988, Page 26

Delay likely on N.Z. Food

By

MARK REYNOLDS

The unsecured creditors of New Zealand Food Group (in liquidation) will have to wait up to six months to know if they will be paid. The receivers, Arthur Young, told a creditors meeting in Christchurch yesterday that any distribution to unsecured creditors of the snack bar manufacturer will depend on whether export marketing development incentive claims of more than $BOO,OOO are allowed by the Inland Revenue Department. A decision on this could take more than six months.

N.Z. Food Group, a subsidiary of the ill-fated Charter Corporation, has claimed $410,000 in EMDI’s for the 1987 year and a similar amount for 1988.

“Currently we estimate the final realisation of all assets will result somewhere in the range of a shortfall against the debenture holders of $300,000, to a surplus of $200,000,” Arthur Young’s Mr Ross Mcßobie said.

The group was put in receivership on February 10, in the wake of financial troubles of Charter (also in liquidation). However, the company, which employed 140 people at its Linwood, Christchurch, factory, had been trading profitably since it was established in 1983.

At the time, Arthur Young had been working on a sale of the business on behalf of Charter. The company was bought as a going concern on March 4 by Rowntree Mackintosh (Aust.) Pty, a subsidiary of Rowntree, Pic, of Britain. "Details of the final settlement will hopefully be finalised on July 20, the major problems being

the valuation of stock and receivables for which we are still awaiting a final report from the auditors (Peat Marwick),” Mr Mcßobie said. For most of the time since the receivership until agreement was reached with Rowntree, the receivers continued to pay all staff (to keep the work force intact), Mr Mcßobie said. The factory was not producing during that period — to avoid building up a stock of finished goods, he said. After the agreement, about 40 people were made redundant. Part of an agreement with the unions included a claim for redundancy. This will rank as an unsecured creditor, Mr Mcßobie said.

Several creditors have claimed ownership to stock which has been sold, and the receivers are contesting these claims.

The only assets still to be sold are a few items of plant purchased for a proposed chocolate manufacturing line, which Rowntree did not wish to purchase. At the time of receivership, the company was in the process of buying and constructing a new muesli line and a new chocolate line for installation in a new factory, Mr Mcßobie said.

“Most of the muesli line had been paid for and these contracts were completed to allow an on-sale to Rowntree.” The health-bar manufacturing unit has since been shipped to Australia.

Little of the chocolate plant had been paid for. On items where only a small deposit, if anything, was paid, the receivers have declined to adopt contracts, Mr Mcßobie

This is likely to result in as yet undetermined claims from unsecured creditors, he added.

Another cause for concern to the receivers is a planned new factory for N.Z. Food Group. Cita Developments, an Auckland-based company, was constructing a building at Ferrymead, near Christchurch, for N.Z. Food Group to move into.

Following Charter’s receivership N.Z. Food Group advised Cita to suspend operations on the building.

“The receivers have not formed any opinion as to whether N.Z. Food had a contractural relationship with Cita,” Mr Mcßobie said.

“We did, however, advise Cita that we would not adopt any contract that might exist, nor would the factory be required by N.Z. Food or Rowntree.”

Cita is likely to lodge a claim on N.Z. Food Group as an unsecured creditor, the receivers concluded. A statement of affairs tabled at the meeting showed that N.Z. Food Group has estimated total assets available for preferred creditors, debenture holders and unsecured creditors, of $6,848,051 at June 8.

The estimated deficit after payment to all creditors (except shareholders) was $3,392,558. The company had 65,790 fully paid 100 c shares on issue. The receivers said that of $5,080,000 owing to the ANZ on April 8, $3,500,000 had been repaid and about $1.4 million is on deposit with Rowntree’s solicitors, earning interest for N.Z. Food Group’s benefit, pending final settlement.