Owing $86.7 million, Stay in Bed Milk & Bread (SIBMB, traded as Aussie Farmers Direct) is expected to yield only $3.4 million in realisable value, leaving creditors $69.2 million out of pocket, KordaMentha administrators Craig Shepard and Leanne Chesser said.
Recoverable assets include a database of around 100,000 customers, the sale of which is currently being finalised with interested parties. In the months leading up to SIBMB and sister business The General Store (TGS) falling into administration management had attempted to secure a buyer, but despite three parties expressing interest in February they were unable to secure a deal.
Founders Jordan Muir and William Scott had even considered a public float in mid-2017 to secure additional capital for the loss-making business, which burned through $70 million in private investment over four years.
The final death knell for the business came after the investors behind AFD’s holding company withdrew financial support in March following unsuccessful attempts to restructure the business into a profitable operation, leaving the company losing around $500,000 per week without a backer.
In addition to the loss of investment, administrators added that the food, grocery and meal kit delivery business’ strategy was overly focused on sales growth driving unsustainable investment in expensive systems such as IT and logistics infrastructure.
Administrators also agreed with the view of management that it was ultimately unable to compete with Coles and Woolworths. SIBMB had been booking losses for several years prior to its collapse, which worsened from a $10.9 million loss in FY15 to a $21.3 million loss in FY17. TGS was initially making a small profit, but by FY17 booked losses of $627,000. A second meeting of creditors will be held in Melbourne on Thursday 19 April, at which time the process of formally shutting down the remnants of the business is expected to progress.