- Foodora announced it would close operations in Australia on August 2, but 15 days later was placed in voluntary administration.
- It’s believed that concerns over outstanding tax liabilities to both the NSW and federal governments led the German parent company, Delivery Hero, to pull its support for the business, hastening its demise.
- Delivery Hero, worth around $AU12 billion, says it is owed $28 million in a loan to the Australian operation.
- The ATO has yet to finalise how much the company owes in tax and superannuation.
- On the day the business was placed in voluntary administration, the company paid to Foodora-related entities in Asia nearly $100,000.
Global food delivery business Foodora fled Australia earlier this month potentially owing millions in tax, superannuation, as well as a $28 million loan to its German parent company Delivery Hero.
Foodora’s true financial position – the company was placed in voluntary administration a fortnight ago, just days before it was due to wind up operations on August 20 – appears to be in stark contrast to public statements made by company representatives ahead of its collapse.
Creditors met yesterday to hear about the state of the business for the first time. A second meeting is due before September 21.
Worrells Solvency was appointed as administrators on August 17 saying the business faced “significant external challenges”. Foodora Australia announced on August 2, having first met with Worrells on July 26 about implementing closure plan.
NSW Revenue notified Foodora Australia it was investigating back in March 2018, while the closure announcement sparked the latest ATO audit, with the tax office contacting Foodora’s external accountant.
The business was also facing a range of legal challenges, including an unfair dismissal case and allegations by the employment watchdog the Fair Work Ombudsman (FWO) that the company engaged in sham contracts for delivery drivers.
The dispute over contracting was at the core of the government arguments over tax liabilities, which are believed to be in the millions of dollars.
Foodora slid into administration with $500,000 in cash in the bank as part of $566,000 in assets, and owing $28.25 million, not counting a two-year ongoing dispute with both the Australian Tax Office and Revenue NSW over payments for unpaid superannuation, payroll taxes and Pay As You Go taxes. The only secured creditor was office supplies business Winc Australia, owed $93,000 for the Lenovo tablets it supplied.
Trade creditors were owed around $150,000, while employee entitlements and taxation debts were listed as “TBA”.
Worrells notes in its report to creditors that when it was appointed: “the Company’s position is that all employees have been paid their entitlements in full” but adds “there are a number of disputes surrounding the basis upon which the delivery riders were engaged by the Company”.
The potential taxation claims led German parent business Deliver Hero SE, worth an estimated $AU12.2 billion, to pull the pin having provided a $28 million “loan” to the local operation. At the time the company claimed it wanted to “focus on regions with greater growth potential”.
Foodora Australia said it was solvent when it announced the closure, and when it went into administration “to the best of its knowledge”, had met all payments due to creditors, specifically employees, restaurants and contract riders.
It now looks like the riders, among the company’s creditors, are unlikely to be paid.
Documents lodged with the corporate regulator ASIC by Worrells reveal that among its outstanding liabilities, there is a paid parental leave claim of $8,500 to one employee.
Worrells told ASIC that after they had been engaged by Foodora Australia:
It later became apparent that a solvent winding up to facilitate the Company’s closure of its operations became untenable, due to further claims that arose from audits conducted by the ATO and Revenue NSW surrounding the basis upon which the delivery riders were engaged by the Company.
We understand that these further claims then resulted in the parent company, Deliver Hero SE, indicating its intention to withdraw financial support to the Company.
On the day Foodora Australia slid into administration, it paid nearly $194,000 to its lawyers, Clayton Utz, and nearly $100,000 to two company-related entities based in Asia.
Foodpanda Singapore received nearly $64,000, with more than half that figure accrued in May. Foodpanda Malaysia was paid more than $36,000.
Delivery Hero acquired Foodpanda in December 2016.
Among the listed creditors, Workcover Queensland is owed more than $15,000 dating back to June.
In a statement to Business Insider, Worrells says the August 17 payments were made prior to their appointment as administrators at 11.30am that day.
“Any transactions that occurred prior to that appointment were made by the company and its directors and employees,” the statement says.
“As part of the Administrators investigations we will be undertaking a review of payments made and the financial position of the company and these investigations may involve payments made immediately prior to our appointment as Administrator and the source of any funds used to make those payments. Our investigations will be reported to creditors in an upcoming report pursuant to section 439A of Corporations Act.”
Berlin-based Foodora launched in Australia in March 2016 after acquiring a local delivery business, Suppertime, in late 2015 and rebranding it. The business operated in Sydney, Melbourne and Brisbane.
In its briefing to creditors, Worrells said the ATO advised them it is currently under assessment for outstanding PAYG and superannuation for FY2015-16, including penalties and interest, and is also seeking further information to complete the audit of the subsequent two years of operation.
“Their advice appears to suggest that they have now deemed the subcontractors to be employees,” Worrells said.
Meanwhile, Revenue NSW is believed to be seeking more than $500,000.
Neither Revenue NSW nor the ATO will comment on the matter due to confidentiality.
Worrells told creditors that Revenue NSW determined that payments made by Foodora to delivery riders “were deemed to be payments made to common law employees and that this contract between the Company and its delivery riders attracted Payroll Tax”.
The Transport Workers’ Union (TWU) boss Tony Sheldon said a committee of inspection has been set up, involving the TWU, ATO and Revenue NSW, to discuss the outstanding payments with with Foodora.
The union wants Foodora riders to contact it for claims unpaid wages and superannuation. The TWU is representing riders at the creditors’ meetings.
Sheldon said there was “something fundamentally broken” in the system if Foodora is allowed to avoid its obligations.
“Here we have Delivery Hero making a claim of over $28 million on its own company while it has been ripping off taxpayers and riders with its exploitative business model,” he said.
“This is wage theft on a grand scale. I am calling on the Federal Government to prosecute all entitlements on behalf of these workers.”
The union has contacted new Industrial Relations Minister Kelly O’Dwyer urging the government to force Foodora to create a compensation fund for riders, as well as paying any outstanding taxes, before it’s allowed to leave the country.
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