03 Dec Chain of Chinese Restaurants
Capability: Insolvency
Industry: Hospitality
Appointment: Voluntary Administration followed by Liquidation
Overview
A group of restaurants specialising in authentic Chinese cuisine, established in 2005. It began as a family business and grew into a group employing more than 100 staff at its peak.
Challenges
Over the previous few years, competition and wage costs rose. The ATO also audited the group’s past tax returns, which increased its ATO liability to more than $3 million in total. At the same time, the owners were nearing retirement, did not want to keep trading and had no succession plan.
Solution
As a result, we were appointed as voluntary administrators. We helped sell the group’s profitable stores, and their employees kept their jobs as part of the sale. In addition, we closed the stores that were not performing and moved staff and resources across the group.
From the sale proceeds, we paid a dividend to priority employee creditors for the employees who did not continue. Key suppliers also kept an ongoing business relationship.
How Greengate Advisory can help
We review trading performance and non-financial factors to find the options that improve every stakeholder’s position. Acting early often decides whether an SME restructures successfully or fails, and it protects the business’s value. We can develop and carry out a restructuring strategy with you.
Read more: our guide to voluntary administration.
