Red Lea Chickens enters voluntary administration after 60 years in business

Sixty-year-old takeaway chicken brand Red Lea Chickens has been placed into voluntary administration. Over 500 workers reportedly have had their jobs terminated.

An email over the Easter long weekend was sent to workers from the Blacktown processing plant and Sydney retail stores, the ABC reports. Administrators on Tuesday reportedly graced a meeting at the Blacktown processing plant where a number of employees of the family-owned business learned of their fate. Wages and entitlements are expected to be worked out and paid for during the formal winding down process.

Those in six company-owned stores are now out of work. The franchise network of 22 stores will continue to operate.

Mark Huang, a Rouse Hill franchisee, said he was informed about the situation in an email. “They said Saturday delivery, Monday last delivery, that’s it,” he told News.com.au. Huang has arranged an alternative supplier arrangement with YCC Poultry and Baiada.

Huang cited intense competition from Coles and Woolworths, which sell roast chickens at a loss, as well as rising rents.

A statement on Red Lea Chickens’ website states that certain related entities were placed into Voluntary Administration with McGrathNicol partners Jason Preston, Barry Kogan and Kathy Sozou as administrators. Red Lea's financial position is unsustainable after investors withdrew funding. An investigation into the company's affairs and the reasons behind its financial failure was reportedly launched.

In the statement, McGrathNicol said they regret to advise that the administrators could not trade the business and have no alternative but to undertake an orderly wind-down of operations. Additional information will be provided to suppliers and creditors in the coming days.

The first creditors meeting is slated on April 12. “The immediate focus of the administration is to work with key stakeholders to ensure an orderly wind-down of operations and commence our investigation into the affairs of the Red Lea Group and the reasons for its failure,” McGrathNicol said.

Red Lea Chickens distributed fresh and cooked chicken products and has been operating since 1957. It was founded by John Velcich, a teenage refugee from Croatia. Velcich sold the company in 2016 reportedly because of shrinking profits.