Madam Woo restaurant when it traded in Takapuna, Auckland. Photo / Ted Baghurst
The company behind the Madam Woo national restaurant chain has defied the odds, emerging from voluntary administration to continue trading.
Malcolm Hollis, one of the Christchurch-based PwC accountants appointed on November 24 to administer the restaurant business, said it would continue and was no longer under administration.
“It’s going to survive. We’re very happy with the outcome. From February 10, it was handed back to its directors. It’s one of the few successful voluntary administrations that’s occurred in New Zealand to carry on trading out,” Hollis said, expressing great satisfaction with the result.
“Ninety per cent of voluntary administrations end up in liquidation.”
Director Fleur Caulton had “worked very hard and she continues to work very hard”, he said.
Staff had been concerned about the company’s financial position but had also pulled together to make the business work and ensure it did well, he said.
Hollis and John Fisk were appointed to try to keep the business afloat and manage the process to reach a deal with creditors which had been achieved.
Those creditors had agreed to a payment schedule to allow the company to trade and Hollis said almost all had been paid, although the settlement was not full amounts owed.
Inland Revenue received around 50c in the dollar. It was owed $201,000. Employees had received 100c in the dollar. Most other creditors got 40c in the dollar, he said. Landlords had also been reasonable, he said, agreeing to partial payments.
Hollis said on November 24 that the administrators’ role was to try and rehabilitate and restructure the business to avoid the alternative: liquidation or receivership.
Go To Collection ran the Malaysian fusion restaurants as Madam Woo and Hawker & Roll.
No Hawker & Roll outlets have survived but Hollis said Hamilton’s Madam Woo, Queenstown’s Rāta and Madam Woo and an Onehunga kitchen were continuing.
In November it was reported the company employed around 100 staff and was struggling after the pandemic and lockdowns.
In early 2020, Go To Collection got Government Covid cash of $1.02m for 173 staff, then $416,000 for 93 staff, $114,000 resurgence wage subsidy for 104 and a wage subsidy in August 2021 for 162 people of $1.11m.
The money was paid via Work and Income’s Covid-19 wage subsidy to keep businesses afloat during lockdowns.
In November, the business said: “After a decade of success, Go To Collection, the owners of Rāta, Madam Woo and Hawker & Roll restaurants, have taken the very difficult decision to place the business into voluntary administration.”
Hollis explained back then what had gone wrong: “The company has experienced a difficult period due to the impact of Covid-19, especially the extreme shortage of staff. We will work with the team to devise and implement a restructuring plan to ensure the components of the business that are operating well can have a successful future.
“The best-performing restaurants will continue to provide high-quality services. However, the less popular sites will be closed. Nearly all existing staff will be retained,” he said five months ago.
A watershed meeting had been held and creditors had agreed to take partial payments.
The Herald reported in January that creditors met to discuss a proposal put to them. Hollis said then: “Depending on the nature of the claim, they will receive between all of their money or some of it. I’m optimistic they will accept it.”
Caulton said last year that immigration issues had created major staffing problems. Covid, labour shortages and “fraught visa application processes” had taken a significant toll on the business, she said.
On February 17, a deed of company arrangement was filed with the Companies Office. That recorded that Madam Woo Takapuna and Commercial Bay had shut, along with Hawker & Roll outlets in Commercial Bay, Sylvia Park, Tauranga and Queenstown.
This month, two directors resigned leaving Caulton now the sole director. Sir Michael and Lady Christine Hill’s daughter Emma Hill resigned, along with Auckland’s Andrew Glenn.
Sir Stephen and Lady Margaret Tindall remain part owners but Hollis said today Josh Emett no longer owned shares in the company.
Hollis also issued a statement today where he said voluntary administration was a mechanism which could save businesses and it had worked well with the restaurant chain.
“In the case of Go To Collection, the directors and shareholders could see that the business needed restructuring. They took advice from their advisors as to what they could do. Ultimately, they took the step to voluntarily appoint a voluntary administrator before it was too late. One of the key differences to other formal insolvency processes such as liquidation and receivership is that under a voluntary administration, a temporary moratorium is automatically triggered upon appointment, which prevents creditors from taking action or enforcing securities against the company.
“This provides the administrators and directors with the time and breathing space to assess all options, develop a proposed restructure solution termed a deed of company arrangement and present this to the company’s creditors,” Hollis wrote.
That moratorium enabled the administrators and board to develop a deed central to which included all stakeholders - shareholders, bank and creditors - accepting a proposal whereby all parties accepted a reorganisation of the company that resulted in a better outcome than if it was liquidated, he said.
The profitable restaurants continued to trade as going concerns. Others shut.
The shareholders agreed to inject additional funds into the company. The secured creditor agreed to accept a partial write-down of its debt, employees were paid in full and preferential and unsecured creditors received between 50 and 40 cents in the dollar, with creditors owed less than $1000 being paid in full.
The deed named Westpac as a secured creditor.
Hollis said today landlord creditors of the closed restaurants got a one-off rent payment equivalent to three months’ rent.
“Ultimately, as was the case for Go To Collection, success came down to highly motivated people focused on making the business succeed and all parties agreeing to accept some form of financial pain - but still understanding that the outcome was better than would otherwise be,” Hollis wrote.
The company is now in a much stronger financial position, focused on its best-performing restaurants and with a highly motivated management and staff: “A great overall outcome and exactly what the VA process was designed for,” he concluded.
Caulton expressed delight today, stressing that administration was chosen to ensure the business survived.
“We’re really pleased with the outcome. Everyone’s worked extremely hard. The staff have been amazing. A lot of the creditors got paid 100 per cent. How good is that? The outcome has been so positive and that’s allowed us to restructure,” she said.
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