Butlers Chocolate Cafe Closes: Financial Woes and Unpaid Debts

The popular Butlers Chocolate Cafe, a well-known name in New Zealand, has recently shut down its doors, leaving staff and creditors in a state of uncertainty. The closure has sparked questions about what led to the downfall of the business and who stands to be affected financially.

According to the first liquidators’ report, the New Zealand franchise of Butlers Chocolate Cafe owes more than $1 million to creditors and staff. The company had 30 employees, some of whom were on work visas, when it was placed into liquidation after operating for 18 years. The news has left many staff in a difficult position, with some now struggling to cover basic needs like rent and food.

Four of the five stores have already closed, while the remaining store in Queensgate, Wellington, is still operating temporarily to clear out stock. Liquidators Jessica Kellow and Iain Shephard of BDO were appointed on July 4, and they highlighted the challenges the company faced, including a prolonged economic downturn following the pandemic, especially in Wellington, where four of its stores were located.

The company also had a presence at Sylvia Park in Auckland. The liquidators pointed out that weakened consumer confidence and reduced foot traffic significantly impacted sales. Additionally, inflationary pressures on chocolate, dairy, and coffee supplies further strained the company’s ability to maintain its operations while upholding the quality and experience that customers expected.

Despite the challenges, the company’s directors continued to invest funds into the business, but the situation did not improve. The report also revealed that employees, who are preferential creditors, are owed $45,847 in holiday pay. Inland Revenue is owed $140,911 in GST and payroll. Unsecured creditors, including trade creditors, are owed $249,949, while $595,822 is outstanding to directors and related party loans.

With a total of $156,527 in inventory and $500,000 in fixed assets, the company’s financial situation remains uncertain. Liquidators said it was too early to estimate what funds, if any, will be available for preferential and unsecured creditors.

Creditors include major companies such as BNZ, ACC, 2degrees, Deloitte, Kiwi Property Holdings, One NZ, Powershop, and Waste Management. The company’s directors are Jason Calcott, Nicholas Dunphy, and Mortimer Kelly, according to Companies Office records.

One store manager, Maddie Hazelwood, set up a Givealittle page to support staff who were left jobless without warning. Hazelwood emphasized that the closure had deeply affected everyone, especially those on work visas, who now face additional stress due to their uncertain immigration status and limited time to find new employment.

As the situation unfolds, the closure of Butlers Chocolate Cafe has raised concerns about the sustainability of small businesses in the current economic climate. The story of this once-thriving cafe serves as a cautionary tale for entrepreneurs and a reminder of the challenges that can arise in the hospitality and retail sectors.