More than $6.8m owed by failed Wishbone

National cafe chain Wishbone, which had an outlet at Dunedin Hospital, owes creditors more than $6.8 million, the liquidator’s six-month report shows.

Mohammed Jan, of Liquidation Management, was appointed to The Woodward Group, a holding company used to trade the business, in August last year by special resolution of shareholders.

Wishbone, a pre-made food manufacturer and retailer, was the brainchild of Andrea Gibson Scarlett and her husband Shayne Scarlett, who started the business in Wellington in 1999.

It had 17 stores, mostly in Wellington, Auckland, Christchurch and Dunedin, with about 110 staff. It also sold pre-made meal packs to more than 60 supermarkets and had a fledgling motel/hotel trade.

In the report, Mr Jan said the company managed to survive two Covid-19 lockdowns, including obtaining wage subsidies and creditors’ support.

The directors had stated the company failed due to a decline in sales in the retail stores due to the new hybrid work-from-home model.

However, inflation, recession, wages and increased costs of goods affected it immensely. The company had also incurred significant tax and creditors’ debt and was not in a position to trade out.

Some suppliers had stopped credit while others had reduced their credit limits, which made it ‘‘incredibly difficult’’ to obtain supplies. The directors tried to keep the business afloat by investing more capital but ran out of cashflow and funds and the company tried to get investors, but to no avail, his report said.

Late last year, BNZ was not willing to continue to support the company funding and another private investor refinanced the loans. After advice from their accountant, shareholders placed the company into liquidation.

The liquidator received 26 inquiries from prospective buyers of the company, factory and individual outlets. He reviewed offers and expressions of interest but was not successful in selling the business.

Company plant and equipment were sold via a public auction while some chattels remained unsold at storage in Dunedin and would be separately sold via auction. There were also some vehicles to be sold. Total assets at this stage totalled $452,189.

Inland Revenue has filed a preferential claim of $462,640, while preferential claims have been received from 86 staff of $339,961. The liquidator had received 61 unsecured creditor claims totalling nearly $1.9 million while it also had three secured creditors claims of more than $4.1m.

At this stage, it was not possible to provide an estimated date for the completion of the liquidation, nor was it possible to provide a definitive statement as to whether certain transactions would be clawed back for the purposes of making payment to any class of creditor. Any prospect of a distribution to the creditors was dependent on the quantum of the recovery of the sale of assets, he said.