Fast food chain Pie Face – known for its smiley-faced pies – is back on the market after going into receivership for the second time in two years.
Insolvency firm O'Brien Palmer is finalising an information memorandum and plans to kick off a sale process next week after partner Chris Palmer was appointed receiver and manager of Pie Face Pty Ltd earlier this month by financier TCA Global.
Despite the pie maker's chequered past, O'Brien Palmer has already received approaches from fast food companies, private equity investors and convenience food manufacturers and expressions of interest from would-be franchisees.
"We thought the past might put people off but the expressions of interest indicate that there's an understanding of the prospects of the business and its potential is strong – once unshackled from the legacy of historical management issues it could go on and achieve great things," O'Brien Palmer partner and joint receiver-elect Liam Bailey told The Australian Financial Review on Thursday.
Up for sale is Pie Face Pty Ltd, which operates a commercial kitchen and a wholesaling business, Pie Face Holdings, which owns the intellectual property, and Pie Face Franchising, which oversees franchised operations in Australia.
"There's an underlying strength to the brand and a recognition there's some strong potential there for growth and development," Mr Bailey said.
The 13-year-old company, which was founded by former Citigroup banker Wayne Homschek, collapsed in November 2014 after attracting more than $35 million in funding from high-profile investors including retail entrepreneur Brett Blundy, Fat Prophets founder Angus Geddes and Rothschild Australia chairman Trevor Rowe.
Over the next two months the administrators, Sule Arnautovic and Rod Sutherland of Jirsch Sutherland, closed about 20 company-owned and franchised stores and cut costs.
In December 2014 creditors owed more than $20 million agreed to a deed of company arrangement, under which unsecured creditors such as food suppliers would receive between 14¢ and 19¢ in the dollar.
Around $1 million was paid into the deed fund over the next 12 months, with most of the funds paid out to satisfy employee entitlements.
However, despite store closures and cost reductions, the group was unable to comply with the requirements of the DOCA and missed monthly payments to TCA Global, which had taken over loans from major lender Macquarie Bank.
TCA, the largest secured creditor, appointed Mr Palmer as investigating accountant to the group in October and receiver/manager to Pie Face Pty Ltd earlier this month.
About to be served
Creditors agreed to terminate the DOCA last week and the business is now being restructured by O'Brien Palmer ahead of a sale.
Mr Bailey said the receivers had closed 11 unprofitable company owned stores and cut costs in head office, leading to the loss of about 100 jobs, but about 28 franchised stores in Australia continued to trade.
At its peak Pie Face had more than 70 company owned and franchised stores and was preparing for an initial public offer.
Mr Homschek resigned from the board in February 2015 after shareholders moved to sack him and is understood to have returned to the US, where he is being is sued by the Pie Face parent company.
Pie Face appointed a new chief executive, Bruce Feodoroff, and a new chief financial officer, Michael Craig, in October. Banker Bruce Wookey, a non-executive director of TCA, remains on the Pie Face board after being appointed in December 2014.
Mr Bailey said if no buyer could be found, Pie Face would be wound up and its assets sold off separately.