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Five underperforming Burger King restaurants in Wellington and Auckland could be closed permanently as recipients seek to reach a “compromise” agreement with the company’s creditors.
The owners of Burger King in New Zealand, Tango New Zealand Ltd, went bankrupt on April 14 after the fast-food chain took a significant hit during the coronavirus blockade.
Recipients Grant Graham and Brendon Gibson of KordaMentha said at the time that the goal was to restart the business after closing and then sell it.
To prepare for the sale, creditors, including restaurant owners, have been asked to accept a compromise agreement, which would allow them to receive some of the money owed to them.
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The deadline to reach a compromise agreement was Tuesday night.
The restaurants proposed for closure are those at Courtenay Place and Lambton Quay in Wellington, and Queen St, Takapuna and WestCity Mall in Auckland.
Documents filed with the Business Office on May 6 show that $ 50 million is owed to senior lenders.
The recipients have previously said that the lenders are a consortium of ANZ, ASB, and Rabobank.
Things
The owners of Burger King in New Zealand filed for bankruptcy on April 14.
Banks back the compromise agreement and have agreed to share half of the proceeds from the sale of more than $ 30 million if the company is sold as a going concern.
They also forgave some interest payments and provided an overdraft to help restart the business.
As of April 1, the company had other creditors of approximately $ 11.8 million, plus monthly rents of $ 1.7 million that it could not meet, according to the compromise agreement documents.
The recipients estimated that the business would remain with a positive cash flow until December if the commitment of the creditors continued.
The engagement deal paperwork showed how Burger King ended up in the hands of the receivers.
“As of April 1, 2020, the Company had creditors of approximately NZ $ 11,800,000 plus monthly rents of approximately $ 1,700,000 that it cannot currently meet,” they said.
“Although the business has now restarted, it will take time for the Company to reach its pre-closing trading levels and there is uncertainty as to how quickly trading will recover.
“The closure of Level 4 Alert meant that the business had to close its doors for more than 4 weeks and therefore was unable to pay its outstanding debts as of April 1, 2020 in the normal course of business.”
“The final shareholders of the Company have informed that they will not put any more capital into the business.”
That shareholder is Berkeley Square London-based private equity investor Blackstone.
That meant that the company had defaulted on its loan agreements with banks.
Australian lead franchisor BK AsiaPac PTE supports the deal.
During the level 4 blockade, the company received the government wage subsidy, which allowed it to pay its staff at least 80 percent of their normal salary for 12 weeks, allowing the company to reopen 71 of its 83 restaurants. when the alert level was reduced to level 3.
