Packaging printers blind-sided by massive Darrell Lea exposure

The iconic Australian confectionery company, which filed for administration on 10 July, was acquired by Queensland-based pet food company owners, the Quinn family, on 3 September.

The retail business, Darrell Lea Chocolate Shops, which had comprised up to 60 stores across the country, was wound up at the third meeting of creditors on 12 September.

It is unclear exactly how much is owed, but The Australian has reported that the family business owes $56.5 million and that unsecured creditors could lose as much as $12.7 million.

Administrators PPB said that the return to unsecured creditors is likely to be zero cents in the dollar.

According to the minutes of the creditors meeting, administrator Daniel Walley “advised that any returns to unsecured creditors were unlikely based on current asset realisations”.

PPB’s remuneration for the administration and liquidation process is expected to top $2.5 million.

One of the worst hit suppliers is VMD Packaging, based in Kurnell in NSW. The firm had only won the Darrell Lea contract late last year, and owner Nick Strue told ProPrint that the confectionery company comprised 70% of VMD’s turnover.

He expected to write-off around $500,000 owing on stock produced locally, and has concerns over considerable pre-orders for stock sourced from Asia, for which VMD Packaging is liable.

The father of five told ProPrint: “It makes it very hard. I could lose my house over it but I’m trying to stay positive.

“We still retain the business with the new owners but there is a massive hole there. We have done the figures – if we can get a bit of help from all our creditors and our suppliers and get them to work with us and work out a few payment deals, we will be able to trade out of it.”

The small family firm immediately had to let go of four of its 15 staff, said Strue, who bought the company seven years ago, having joined 20 years ago and worked his way up from the factory floor.

LabelCraft has produced the self-adhesive labels for Darrell Lea for 31 years and managing director Terry Rowney said he was blind-sided by the collapse of Darrell Lea, which had been a good payer.

The 230-staff company expects to take an $80,000 haircut.

Rowney said the seven-site group will be able to swallow the loss, but it was a blow that will wipe away “all the hard work we have put into our business for the last 12-18 months, all the little and big gains”.

“Making gains to improve your bottom line is so hard these days,” added Rowney.

Darrell Lea’s folding carton work was produced by Cardboard Containers, based in Rosebery, NSW. ProPrint was unable to reach owner Jim Langley, but he was quoted in The Australian as saying the group’s exposure could be as high as $200,000.

The cardboard box supplier had $110,000 in unsecured debt with Darrell Lea and another $88,000 worth of stock covered in its branding in his warehouse, according to the newspaper.

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