Australia Fresh Kailyard Pty Ltd t/as Marco Fine Foods & Groceries - Case Update

Robert Smith and Matthew Hutton of McGrathNicol, the administrators of Australia Fresh Kailyard Pty Ltd t/as Marco Fine Foods & Groceries (AFK), have recommended that creditors vote in favour of a DOCA proposal from AFK’s director, but have acknowledged that approximately $300 thousand in claims may be available in a liquidation scenario.

The Reservoir, Victoria-based grocery store entered voluntary administration on 22 January due to certain external factors such as interest rate increases and inflation, as well as various internal issues including an undercapitalised balance sheet, systemic liquidity shortfalls, inaccurate and unreliable financial information, and inadequate cash flow management.

The administrators have now reported on the results of their preliminary investigations and the DOCA proposal received from Mr Haiming Jiang, the company’s director.

The administrators have concluded that AFK may have been insolvent from 31 August 2021, and that a liquidator may be able to make a claim for insolvent trading of approximately $200 thousand, as well as an unfair preference claim of approximately $100 thousand and an unreasonable director related transaction claim of approximately $5,000.

However, given the complexity of the claims, their potential quantum and the costs associated with pursuing them, the administrators have concluded that it would be uncommercial to do so. They have recommended that creditors vote in favour of a DOCA proposal from the director which is expected to provide a return of 100 cents in the dollar to secured and priority creditors, and between 13 cents and 17 cents in the dollar to unsecured creditors.

The second meeting is scheduled for 27 February.

Read the administrators’ report here.