Corporate insolvency can occur to even the most seemingly successful businesses. As reported recently by The Sydney Morning Herald, the beloved fast-food chain famous for its Aussie pies, Pie Face, has encountered financial difficulties, and has appointed an administrator in an attempt to save the company through restructuring and refinancing.
Earlier this year Pie Face had shut down six of its operations in New York, leaving just one store in Hell’s Kitchen, after failing to make the Aussie meat pie a staple in the US. One of the first signs of insolvency is poor cash flow forecasts and legal actions, which was evident last year when Pie Face was sued by franchisees over allegations that they had been misled in regards to forecasted potential profits and costs.
After the appointment of the administrators, Pie Face announced it would close some stores in NSW and Victoria. Although Pie Face’s debt load remains unclear, it is predicted that an estimated 85 per cent of Pie Face stores were unprofitable and suffered a drop in sales of between seven to eight per cent, year on year, for the past four years. This suggests that Pie Face has had continuing losses, which is a prime indicator of insolvency.
If you are worried that your company is straying down the same path of insolvency, you need to act now before it’s too late. CRS Insolvency Services operates 24 hours a day, 7 days a week, providing an insolvency hotline to offer you free and impartial insolvency advice when it best suits you. Call them today on 1800 210 073.