All About the Collapse of Barretts Bakery
A well-known and hugely popular West Australian bakery chain, Barretts Bakery, is now facing an uncertain future, having gotten into debt of $2 million to the Australian Taxation Office (ATO). Administrators are now running fast to rescue the business, which has been a major part of Perth’s world-famous food scene since its opening in 1998.
According to a notice on the Australian Securities and Investments Commission (ASIC) website, control of Barretts Bakery has gone over to their administrators. The bakery, popular for its range of delicious bread, pastries, and cakes, is now under the management of Mervyn Kitay, principal at Worrells Solvency & Forensic Accountants.
The bakery chain sprouted from a small beginning to having outlets across Perth, including locations in Claremont Quarter, East Victoria Park, Mount Hawthorn, Karrinyup, Joondalup, and downtown Perth.
The financial difficulties facing the bakery are due to legacy debts that piled up during the COVID-19 pandemic, which severely impacted both the retail and wholesale sides of the bakery. Mervyn Kitay has made public statements that if they do not find a restructuring plan to save the company, the business may either be sold or face liquidation.
Kitay has hinted at a more assertive approach by the ATO, especially as the pandemic recedes into the background. According to him, the revenue collection agency has been greatly increasing its actions against non-compliant companies.
Part of this aggressive strategy includes giving director penalty notices, a move that puts senior management under the microscope, making them responsible for the company’s tax obligations. The ATO publicly warned, “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.”
During the fiscal year 2022-23, the ATO sent out over 17,000 such penalty notices. Kitay said that his agency had experienced a significant increase in inquiries from businesses seeking advice on navigating these delicate financial issues.
A meeting involving the creditors of Barretts Bakery happened recently. While the details of the meeting are not public, it represents a major step for the company, its employees, and its many suppliers and stakeholders. The bakery’s uncertain future is a sign of broader challenges facing businesses in the aftermath of the pandemic, as they grapple with the fiscal impacts.
What happens to the famous and beloved bakery depends on how it can handle this major financial hurdle. Fans of the bakery’s products will be left waiting and hoping that Barretts continues business as normal.