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Has public support saved Spring Gully?

Next week's second creditors meeting will determine whether or not the flood of support shown for Spring Gully Foods since it announced its collapse is enough to save the iconic South Australian brand.

On 1 July, Spring Gully's estimated 300 creditors will meet in Adelaide and will be asked to approve a Deed of Company Arrangement (DOCA), prepared by Spring Gully, outlining how outstanding debts will be treated.

Under the terms of the DOCA all creditors will be paid 100 cents in the dollar, with an initial down payment and regular quarterly payments until the debt is finalised.

These payments will be funded through Spring Gully's normal business operations, which have returned to profitable levels thanks to strong sales, retailers' support and changes to the food producer's business operations.

After announcing in April that it had entered voluntary administration with more than $3m in debts, the 65 year old South Australian pickles and sauce food company got a boost when three weeks worth of sales happened in three days.

"Since we entered voluntary administration in April, we have received outstanding support from the public and major retailers which has boosted orders and sales to the stage that we had to introduce a second shift in May," Spring Gully’s managing director, Kevin Webb, said.

"The level of support we have received has been fantastic and has now been maintained for a significant period of time.

"Providing we can maintain this level of support, and we will be working hard to ensure this continues, we are confident that we now have a bright future," he said.

While discussions with potential investors during the administration period were fruitless, Spring Gully is confident it can operate successfully under its current family control.

The company's administrator, Austin Taylor of Meertens, said Spring Gully's proposed agreement is a great result for both the brand and its creditors, and said the support he's seen from consumers (and fellow SA brands) has made Spring Gully's case one of the most successful administrations he's been involved with.

"It will give creditors 100 cents in the dollar, which is highly unusual in these circumstances," he said.

"The alternative for creditors will be to put the company into liquidation, but if this happens, it is likely the unsecured creditors will receive considerably less."

 

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