Photo: RNZ / Louise Ternouth
A major provider of the government's troubled free school lunch programme owes more than $14 million to hundreds of creditors after going into liquidation last week.
Libelle Group was contracted by Compass to deliver 125,000 meals a day as part of the Ka Ora, Ka Ako programme, but after its liquidation, Compass agreed to buy the business.
The report by liquidators Robert Campbell and David Webb of Deloitte released on Tuesday evening revealed Libelle owed:
- $2.38m to preferential creditors (which include staff and Inland Revenue)
- $8.37m to secured creditors (who have the right to sell debtors' assets if they fall behind on payments)
- $3.58m to unsecured creditors (who do not have the right to sell debtors' assets if they fall behind on payments)
It did not disclose the value of Libelle's assets, like cars, equipment and stock.
Some of the amounts owed to creditors were still to be verified, the report said.
It listed 248 creditors, which included schools, utility companies and food and packaging suppliers. The report says nothing about when or if creditors would get what they were owed.
It also did not detail when or why Libelle Group went into financial strife - only that after paying staff on 6 March, it ran out of cash.
It revealed at the time of Libelle's liquidation, there were "significant creditor arrears", critical suppliers were threatening to stop supplying it or remove leased assets, and all business units were making a loss.
"We will undertake an investigation into the affairs of the Company though, at this stage, we do not know whether this will disclose any other reasons for liquidation," Campbell and Webb wrote.
Before the revamped programme, Libelle had supplied lunches for $9 per head to 17,000 school children - and then scaled up to supplying 125,000 lunches for $3 per head.
Libelle lunches pictured in August, 2023. Photo: RNZ / Tom Taylor
Webb previously told Checkpoint it would look at whether the 'scaling up' at a cheaper price contributed to the company's downfall.
The report said Compass was the only viable purchaser of the business given it had the head contract for the school lunch programme, and it was the only party prepared to provide immediate funding to keep operations running.
It said there were a few parties interested in buying the part of the business that runs school tuck shops, but they either could not make a purchase in time or did not offer enough money, so liquidators were forced to close it.
Labour's education spokesperson Willow-Jean Prime said the report raised further questions about why the government did not step and do something.
"It says that Libelle first approached the liquidators on the 6th of March. We all were made aware once it had been filed on the 11th of March.
"However, the liquidators were in conversation with Compass between the 6th and 10th of March about the potential of buying Libelle, so it makes me think that Compass must have been aware of Libelle's situation prior to the 6th of March, in order to be able to be ready to have a conversation about purchasing this company that is likely to go into liquidation," she said.
"So how much time prior to the 6th of March did Compass become aware of Libelle's problems? This programme has only been in place for a short few months, since the beginning of Term One. So when did everybody become aware of these issues that have led to Libelle's liquidation?"
The School Lunch Collective - a partnership between Compass, Gilmours and formerly Libelle - at first told RNZ it could not comment on the report.
It later sent through a short statement from Paul Harvey, who is a spokesperson for the collective and director of Compass.
He said the liquidators were best to speak to the report, but the collective "took swift action" to minimise disruption to the provision of lunches.
"Today, close to 114,000 school lunches were served to schools throughout New Zealand with 99.86% on time delivery nationally."
In a statement, the associate education minister David Seymour said the initial report had shown the collective "acted decisively" to make sure there was minimal disruption.
"We're now focused on the future and making sure the programme runs smoothly."
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