Global Food & Wine sale gets more time as employer entity heads for liquidation

The Federal Court has extended the administrations of four Global Food & Wine companies to allow administrators to finalise a proposed sale of certain assets to Gulli Food Distributors, while leaving the group’s employer entity on a faster path toward liquidation so employees can access the Fair Entitlements Guarantee (FEG) scheme.

Justice Anderson extended the convening period for Global Food & Wine Holdings Pty Ltd, Global Food & Wine Pty Ltd, Global Food & Wine (QLD) Pty Ltd and Globello Pty Ltd until 30 November 2026. The extension does not apply to GHO Pty Ltd (GHO), the entity that employed the group’s workforce.

The Queensland-based group is a family-owned distributor of dry, chilled and frozen foods, beverages and wine. It supplied approximately 4,000 customers across Queensland and northern New South Wales before Anthony Connelly, Mark Holland and Melissa Smith of McGrathNicol were appointed administrators on 18 August.

Why it matters

The decision shows how the Court can set different administration timetables for companies within the same corporate group when their stakeholders have competing interests.

The four operating and asset-holding companies needed more time to preserve the proposed sale and avoid a rushed disposal of stock. GHO, however, was not included in the transaction, and Gulli Food Distributors was not required to take on its employees. With no independent business or sale to preserve, extending GHO’s administration would only have delayed employees’ access to FEG.

The split timetable allows the administrators to pursue a better recovery from the group’s assets without requiring employees to wait for a transaction that offers them no assured employment or transfer of their entitlements.

The proposed sale

The administrators conducted an expedited sale campaign after their appointment, receiving two non-binding offers. They considered one offer unsuitable and selected the proposal from Gulli Food Distributors as the preferred transaction.

Under the proposal, Gulli Food Distributors would acquire certain assets from the four companies, including a substantial portion of their inventory. The administrators’ subsequent report to creditors clarified that the transaction is an asset sale rather than a sale of the businesses as going concerns.

The administrators told the Court that additional time was needed because Gulli Food Distributors would not have sufficient storage capacity until October. Without an extension, the four companies were expected to enter liquidation before the transaction could be completed.

That would bring the statutory moratorium protecting leased premises to an end, allowing landlords to recover possession. The administrators said this could force an urgent auction of the group’s approximately $4 million of stock, much of which is perishable, at substantial discounts.

An orderly sell-down to existing customers and an auction conducted by Slattery were being maintained as fallback options.

NAB, the group’s largest secured creditor, supported the extension. Seven Seas Seafood, an unsecured creditor owed approximately $28,000, opposed it but did not provide evidence demonstrating that the extension would cause material prejudice.

Justice Anderson was satisfied that the additional time was likely to improve the outcome for unsecured creditors by allowing the administrators to complete the proposed transaction or pursue an orderly alternative.

The employee company

The position of GHO was different.

GHO operated solely as the group’s employing entity. It generated no revenue of its own and relied on the other companies to fund payroll and employee entitlements.

Several employees opposed an extension because it would postpone the appointment of a liquidator. The appointment of a voluntary administrator does not constitute a relevant insolvency event under the FEG scheme, meaning employees generally cannot make claims until the company enters liquidation.

The administrators accepted those concerns and did not seek an extension for GHO.

Their report to creditors estimates employee claims against GHO at between $1.39 million and $1.53 million. No deed of company arrangement has been proposed, and the administrators have recommended that creditors resolve to wind up GHO at the second meeting of creditors.

The report warns that FEG does not cover unpaid superannuation, meaning employees may still suffer losses if the company is placed into liquidation.

Outcome

The Court extended the convening period for the four operating and asset-holding companies to 30 November 2026, while permitting the administrators to convene the creditors’ meetings earlier if appropriate.

GHO remains on the original timetable, with its creditors to decide whether it should enter liquidation.

Anthony Connelly, Mark Holland and Melissa Smith of McGrathNicol are the administrators.

McInnes Wilson acted for the administrators, with E Robinson appearing as counsel.

Read the full decision