Gourmet meal delivery platform Providoor reportedly owed nearly $4.4 million to gift card holders when it entered external administration late last month, highlighting the difficulty for unsecured creditors to recover funds after a company collapse.
Providoor, founded in April 2020 to support high-end restaurants through COVID-19 restrictions, offered ready-made meals to customers across Melbourne, Sydney, Brisbane, and the Australian Capital Territory.
Unlike platforms like Uber Eats, Providoor allowed big-name venues like Rockpool, Entrecote, and founder Shane Delia’s own Maha to ship meals for customers to prepare at home.
The enterprise generated $74 million in revenue for its restaurant partners over its first 18 months.
However, the wind-back of pandemic restrictions, changing market conditions, and what Delia described as dwindling investor sentiment saw the business stumble in April this year.
“I created Providoor during lockdown, when the hospitality world was in disarray and we needed to find a way to survive,” Delia said after shuttering the business.
“Providoor meant we could secure and create jobs as well as give people a little bit of restaurant joy during a pretty dismal time.
“I just wish [Providoor] had been given the opportunity to work through the challenging economic conditions, the same facing so many in the restaurant and hospitality sector right now,” he added.
The business appointed Jonathon Colbran and Tristana Steedman of RSM as liquidators, who said Providoor’s closure would affect 16 employees and 50 partner restaurants.
An assessment of Providoor’s financial situation revealed it held debts of up to $6.3 million at the time of its collapse, including $4.4 million in unredeemed gift cards, The Sydney Morning Herald reports.
Those card-holders are likely to classify as unsecured creditors, meaning major stakeholders in the business will see their debts recouped before everyday diners — if they regain those funds at all.
“Based on our initial assessment of Providoor’s financial position, there is presently insufficient money to pay a dividend to creditors or provide refunds to customers, including gift card holders,” Colbran said on April 28.
Speaking to 3AW radio host Neil Mitchell on Tuesday, Delia apologised to Providoor customers left with vouchers they can’t redeem.
“It’s not fair,” Delia said.
“It’s definitely not fair. I’m outraged that people have been put in this position. I’m gutted that Providoor has been put in this position.
The Australian Competition and Consumer Commission (ACCC) states gift card holders can ask their banks to enact a charge-back on gift card payments in an attempt to claw back funds.
However, charge-backs are generally subject to time limits. In a statement, RSM advised Providoor customers to immediately contact their financial institution to enquire about charge-backs.
Gift card holders can also contact the liquidators directly.
The Providoor collapse is not the first time a high-profile business has left gift card holders in the lurch.
Dick Smith and Borders are just two big-name companies to have faced the ire of gift card holders.
After the collapse of Toys ‘R’ Us in 2018, administrators McGrathNicol announced it would honour purchases made with existing gift cards, so long as customers made a cash purchase of equal value.
Although the move incensed some shoppers, the ACCC states administrators “may place specific conditions on honouring transactions” through gift cards, including “only honouring gift cards if people spend an equivalent amount on products or services to the amount redeemed on the gift card transaction”.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
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