Polar Capital’s Hello Foods: $20m in creditor claims in receivership and liquidation

Polar Capital's Colin Neal says poor trading through the pandemic resulted in a lack of funds. Photo / Supplied

Private equity-owned wholesale food business Hello Foods has $20.3 million in creditor claims after being placed in receivership and was forced to lay off 50 staff, according to shareholder Colin Neal.

The company is now also in liquidation following a High Court hearing in Tauranga on May 22.

Neal, whose private investment firm Polar Capital owned the business, told the Herald the receivership came after two years of poor trading through the pandemic.

The company operated as a manufacturer and distributor of ready-to-eat meals and other food products from sites located in Islington, Christchurch and East Tāmaki, Auckland,

“It was very disappointing. We lost 50 per cent of our business through Covid. Our balance sheet just ran out in two years and it hasn’t really recovered in the market,” Neal said.

“We lost a lot of money and it was a very hard decision for us to make.”

Neal said about 45 to 50 employees had lost their jobs after the closure of Hello Foods.

He said Bay Cuisine, another Polar Capital business, had taken over some of Hello Foods’ portfolios. Bay Cuisine operates as a meat wholesaler in Hawke’s Bay.

Bay Cuisine and financier Pacific Invoice Finance are registered as secured creditors of Hello Foods and are claiming $7.7m and $234,000 respectively.

Inland Revenue is claiming $1.2m with outstanding employee claims at $72,000.

Unsecured creditors include landlord claims which total $8.5m, trade creditor claims at $2.1m, more outstanding employee claims at $54,000, and additional IRD claims at $375,000.

Other creditors claiming funds from the business include Silver Chef Rentals, claiming $35,000, and Davis Trading which is claiming $28,000. Canon Finance and gas provider BOC are among a list of other creditors.

Hello Foods went into receivership on April 4. BDO Christchurch receivers Diana Matchett and Colin Gower were appointed by Bay Cuisine.

Matchett and Gower said Bay Cuisine’s secured debt was reduced by the purchase price of $1.7m. “As at the date of this report, the monies due to Bay Cuisine total $5.9m”.

“We are yet to determine what funds (if any) will be available to meet employee preferential claims.”

Following a hearing at the High Court at Tauranga on May 22, the company went into liquidation. KPMG’s Elizabeth Keene and Luke Norman were appointed to liquidate Hello Foods.

Liquidators have wide powers to investigate a company’s affairs and seek recoveries from various parties. They can, for example, have any insolvent transactions set aside, going back two years before liquidation.

The receivers said Hello Foods entered a conditional sale and purchase agreement with Bay Cuisine before they were appointed.

The receivers settled the sale after their appointment, selling Hello Foods to Bay Cuisine for about $2m on April 4.

Hello Foods’ directors are Colin Neal and Brett Tucker. The company’s shareholder is Polar Capital LP, also directed by Neal and Tucker.

The pair are also directors at Bay Cuisine alongside Eric Woudberg. Bay Cuisine’s majority shareholder is Polar Capital Trustees, owned by Neal.

Matchett and Gower said Hello Foods’ directors reviewed the company’s financial position before the receivership and found “a working capital injection was required”.

“Unfortunately, matters outside of their control prevented the anticipated working capital being provided,” they reported.

The company’s directors and its shareholder determined the “best recovery outcome for the secured creditor was for a sale of the business and assets”, resulting in a sale and purchase agreement with Bay Cuisine, the receivers said in their report.

“Simultaneously, Polar Capital LP assigned its debt and security to Bay Cuisine,” they said.

“Considering the value of Bay Cuisine’s secured debt of c. $7m, it was not likely that a sale of the business and assets would yield a sale price capable of extinguishing Bay Cuisine’s secured debt leading to a recovery to unsecured creditors.”

Hello Foods’ assets at the time of the report came in at $3.6m.

Alka Prasad is an Auckland-based junior business reporter covering small business and retail. She joined the Herald in 2022 following the Te Rito cadetship programme.