Australian company Snows Confectionary has closed its doors after falling into administration last December.
The 85-year old company based in Western Sydney suffered a series of financial shocks in the lead up to its closure, which saw the loss of 90 jobs.
Snows Confectionary is a key supplier of sweets to major supermarkets such as Woolworths and Coles, which sell Snow’s products under their home brands. The company also has markets in Asia and the US.
Great grandson of the founder, and current Managing Director of Snows, Nathan
Hughes, said he had been fighting an uphill battle for the last twelve months to save the company.
“For the great majority of the company’s history we have traded along nicely with cash in the bank,” he said. “However the last five years saw the company falter. This put enormous pressure on us.
“Sugar prices went through the roof and a major customer failed, owing us a lot of money.
“Coupled with that my father, the managing director, suffered poor health. We pulled back from this and were back making a profit [in 2010] until we ran out of working capital and could not get it in place in time.”
According to Snow’s CFO, the company was only fulfilling 65 per cent of its orders in the last few weeks due to the shortage of working capital.
In the last few weeks leading up to its closure, the company sought assistance from the Australian Employee Buyout Centre (AEBC), an organisation set up by the Federal Government to offer an alternative to company closure and break up.
AEBC General Manager Anthony Jensen said a solution for Snow could be to find employees with some ownership of the company when it is restructured.
“Snows Confectionary, from what we could glean in a short space of time, is a company with a lot of potential that got caught up in the malfunctioning of the Australian insolvency regime which does not have the ability to protect companies which get into difficulty, from their creditors. This is very different to the Chapter 11 [of the US Bankruptcy Code] where a company is protected while it restructures,” Mr Jensen said.
The AEBC estimates the closure of Snow Confectionary could knock $80,000,000 out of the local economy.