Company Liquidation Leads To Unpaid Employee Wages

Company Liquidation Leads To Unpaid Employee Wages

When a company goes into liquidation, employees are often left without their hard-earned wages. But the Australian government has a guarantee in place to cover these funds when Australian businesses can no longer pay their dues. Menzies Advisory was brought in to assess the stores which were owned by Doughnut Time and identify whether or not the company would be able to provide the funds needed to meet all unpaid employee wages.

This clipping is from 13 March 2018 of The Sydney Morning Herald. Click here to read the full article.

Doughnut Time workers to miss out on unpaid wages as sale deal collapses

Sacked Doughnut Time employees still chasing thousands of dollars in unpaid wages will likely have to go to the federal government for the money amid reports a deal to save remaining stores has fallen through.

Foreign workers could miss out entirely because the government guarantee is only available to Australian citizens.

Eight Doughnut Time companies and ice cream sandwich business Mister Fitz’s Finest Ice Cream were sent into liquidation on Friday, including one which appeared to control a Queensland store previously slated to remain open.

The same day, Victoria state manager Vanessa Gaddi-Chmielewski told workers the entire company would be liquidated, the ABC reported.

Fallen hospitality entrepreneur Damian Griffiths had earlier told Fairfax Media he would sell seven remaining stores, down from a high of almost 30, to his former CEO Dan Strachotta.

“I just received the news from Dan that the deal with the new company has been blocked by Damian,” Ms Gaddi-Chmielewski wrote on Friday.

“He will not sign the Doughnut Time trademark to Dan.

“As a result, the entire company will go into liquidation — including the stores that Dan was supposed to take over. The sale has not been completed.”

Michael Caspaney from Menzies Advisory had been assessing the state of the stores in liquidation ahead of sending out a report to creditors later this month.

On Tuesday, he was still waiting for a report from the companies’ external accountant and could not say with any certainty what stores the liquidated entities related to or how much money was owed to how many creditors.

But MrCaspaney did note the liquidation was unlikely to produce a dividend, leaving unpaid staff and any other unsecured creditors out in the cold.

“If there’s no dividend, the unsecured creditors have to write those moneys off,” he said.

“With employees, there is a government scheme called FEG, the fair entitlement guarantee.

“If the claim is valid it pays three months of unpaid wages and any annual leave and long service entitlements that are verified.

“It doesn’t pay any superannuation.”

The FEG was most recently drawn on when mining magnate Clive Palmer’s Queensland Nickel refinery collapsed, leaving 800 workers owed almost $70 million.

Critically, the guarantee is not available for foreign workers, which some staff have estimated could make up as much as half of the company’s workforce in some areas.

Some former workers have started an online fundraiser in an attempt to raise money for those who can’t be reimbursed.

It was unclear how many of Doughnut Time’s dozens of unpaid workers were associated with the businesses in question.

“The only way that they get their full entitlements and super [from the company] is if there’s a large recovery but that doesn’t appear likely at this stage,” Mr Caspaney said.

Neither founder Damian Griffiths nor new owner Dan Strachotta responded to questions about the liquidation.

Mr Griffiths previously told Fairfax Media about 60 workers were owed money across Doughnut Time stores and the Fair Work Ombudsman confirmed it was looking into the matter.

The Australian Securities and Investments Commission’s Insolvency Notices service listed nine Doughnut Time-related companies within the 45-year-old’s former empire as being in liquidation but several more remain registered.

The Victorian manager’s comments appeared to suggest the other stores were also covered.

Among those in liquidation is Doughnut Time Mermaid Beach Pty Ltd, which appears to be linked to the Mermaid Beach store Mr Griffiths said would remain open.

The Clayfield store, also previously slated to stay open, was closed on Wednesday, with a For Lease sign in the window.

Mr Caspaney was due to send a report to creditors within 10 business days of the liquidation process starting, with a creditors’ meeting likely to follow.

Menzies Advisory

Menzies Advisory Liquidation & Receivers are Certified Practicing Accountants and Registered Liquidators with over thirty years’ experience in commerce and insolvency. Company directors, accountants, lawyers and business consultants turn to us for expert, compassionate advice in difficult times. Our professional consultants implement the most practical solutions to meet your complex business and financial issues.

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