Barretts Bakery, a popular bakery chain based in Western Australia, has collapsed with a debt of $2 million, prompting administrators to urgently seek a resolution to rescue the business. The Australian Taxation Office is owed the substantial amount. Administrators took control of the bakery chain, established in 1998 in Perth, on July 27.
Solving legacy debt crisis for Barretts Bakery
The top Australian Bakery Chain, Barretts Bakery has gone under over a $2m Debt with administrators quickly seeking ways to find a strategy to save the business from total collapse. The West Australian small business is heavily indebted to the Australian Taxation Office to the tune of $2m.
Mervyn Kitay from insolvency firm Worrells is leading efforts to find a viable solution and save the struggling enterprise.
Mr Kitay told 7 News said the business’s struggles during the Covid pandemic led to the mounting $2 million legacy debt.
A legacy debt refers to debt that is above what could have been expected in relation to GDP and inflation behaviour.
The ATO has provided general advice that if legacy debt is not paid, the company director becomes liable.
“As a company director you are responsible for ensuring that the company’s tax and super obligations are reported and paid on time,” the advice states.
“If your company does not pay certain liabilities by the due date, we can recover these amounts from you personally as a current or former company director.”
Mr Kitay said increasing the director penalty notice can be a “powerful weapon” to force repayment.
The ATO issued more than 17,000 penalty notices during 2022-23, which included thousands of legacy debts being recalled by the government in a bid to target non-compliant companies.
Mr Kitay said senior management could become personally liable for tax and super obligations if the debt was unpaid.