Franchisor in Administration
Franchisor Pie Face has entered into voluntary administration. The company currently has company-owned and franchised stores in Australia, the United States of America and New Zealand.
The purpose of voluntary administration is to enable a decision to be made about the company’s future quickly. An administrator may be appointed by the directors of a company, a liquidator or a secured creditor.
Jirsch Sutherland have been appointed administrators. Their role will be to review the company’s operations and work out if the business should be sold or continue to trade. Claims by creditors are “frozen” whilst the company is under administration.
After investigating the viability of the company, the administrator will report to creditors on the company’s business and financial circumstances. There are three options available to creditors. These are:
- end the administration and return the company to the directors’ control; or
- enter into a deed of company arrangement where the company will pay all or part of its debts in full and final settlement, or
- wind up the company and appoint a liquidator.
The administrator will express an opinion on each option to enable creditors to vote on how to proceed.
Press reports state that company-owned stores have begun to close in Victoria and New South Wales. This follows reports from franchisees who alleged that very few if any were making a profit.