Fast-food chain Pie Face is heading towards profitability for the first time in a long time, as its receiver flags the business will be sold shortly.
But the one-time, high-flying, hot-pie business has left behind a trail of destruction.
Secured debt is $4 million and unsecured debt is estimated to be under $5 million with employees alone owed more than $1 million.
And the listed Retail Food Group, which owns Di Bella Coffee, has made an application to wind up Pie Face Australia in the Queensland Supreme Court over an unpaid debt. RFG declined to comment.
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But Liam Bailey, partner at insolvency firm O'Brien Palmer and receiver of Pie Face trading entities, said many creditors were unlikely to receive payment out of the receivership.
"I can't speak to what the liquidator may be able to recover and pay them as a dividend. But it's unlikely that a surplus will be generated on the sale of the business allowing the the funds to flow to unsecured creditors of the company."
Mr Bailey is joint receiver of Pie Face Pty Ltd, which operates a commercial kitchen and a wholesaling business, Pie Face Holdings, which owns the intellectual property, and Pie Face Franchising, which oversees franchised operations in Australia.
He got the job after Pie Face went into receivership for the second time in two years late in late 2016.
'Cult reputation'
Pie Face once said it had a "cult reputation" and a "cool" and "edgy" brand. Founded in 2003 by couple Wayne Homschek and Betty Fong, it had taken on Australia and the US, and planned to open stores in the Middle East, Japan, Korea and the Philippines.
Investors including retail entrepreneur Brett Blundy, Fat Prophets founder Angus Geddes and Rothschild Australia chairman Trevor Rowe had poured more than $35 million into Pie Face since 2009 with hopes of a sharemarket listing.
But in 2014, Pie Face collapsed owing tens of millions of dollars. The high-profile collapse sparked store closures, job losses, lawsuits, board changes and bitterness among franchisees who lost their livelihood.
Pie Face then struck a deal with financier TCA Global, which took over loans to major lender Macquarie.
Under a deed of company arrangement, unsecured creditors such as food suppliers agreed to receive between 14¢ and 19¢ in the dollar over several years, and Pie Face changed its focus to wholesale and direct retail sales.
But the turnaround bid came unstuck and financier TCA Global appointed insolvency firm O'Brien Palmer in late October.
'Growth potential, if properly managed'
The business was then restructured for sale: a new CEO and CFO were appointed, 11 unprofitable stores were closed and three franchised stores were opened, close to 100 staff members lost their jobs, costs were cut.
Pie Face now has 30 franchised stores, only about 10 people in head office and 60 to 70 people in the kitchen, and big plans to expand overseas, especially in Japan and South Korea.
Mr Bailey said there are seven or eight companies conducting due diligence right now, and they had until the start of next month to put forward binding offers.
"We were very much taken aback by the level of interest in the business notwithstanding the bad press it had received over the years," he said. "There's a lot of recognition of the growth potential, if properly managed."
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