Liquidators raise concerns over company that ran Hog’s Breath Cafes trading while insolvent

Liquidators have raised claims over a number of the iconic Hog’s Breath Cafes that could land the company behind them in hot water.

Liquidators have raised concerns that a company, which ran a number of Hog’s Breath Cafes and was directed by the iconic chain’s former CEO, was trading while insolvent having been placed into liquidation owing more than $1 million.

Ross Worth led the iconic Australian restaurant chain from 2001 until he left in February last year and his company, of which he was the sole director, Packapigs Pty Ltd, operated five stores during his tenure.

His departure as CEO occurred about the same time Packapigs was wound up in the WA Supreme Court owing more than $350,000 in rent, according to documents lodged with ASIC.

Former Hog's Breath CEO Ross Worth declined to comment about the liquidator’s report ASIC. Picture: Annette Dew

FTI Consulting was appointed liquidator of Packapigs on February 20, 2020, after the landlord of the Joondalup store, Lendlease Funds Management Limited, successfully wound it up.

The liquidator has since reported that Packapigs had liabilities of $1.107 million and assets of $128,622.

Packapigs had ceased operating four eateries between April 2019 and February 2020, although FTI Consulting believes the company may have been trading insolvent from July 2019.

Insolvent trading is when a company continues to operate and accrue debts while unable to pay back existing debts.

The company stopped operating stores at Shellharbour, NSW, in April 2019, and Burpengary, Cleveland and Airlie Beach in Queensland between September 2019 and February 2020.

The flagship Airlie Beach cafe and the Cleveland outlet remain open.

The liquidator found Packapigs was owed $365,000 that it loaned to Hog’s Express Brisbane to assist with the development of quick service concept. Picture: Mark Cranitch

TRADING INSOLVENT CLAIMS

The Joondalup franchise ceased operating on about December 2019.

“Based on the information available to me, I am of the view that the company was insolvent from at least July 1, 2019 (and possibly earlier),” the liquidator informed ASIC in June 2020.

“The estimated claim for insolvent trading is in the vicinity of $150,000.”

The liquidator pointed out that the holding company of Packapigs, House of Hogs, was owed $79,740 and may set-off provisions against any insolvent trading claim.

Under ASIC’s guide to directors, if dishonesty is found to be a factor in insolvent trading, a director may be subject to criminal charges and fines up to $220,000 or imprisonment for up to five years, or both.

An ASIC representative would not comment on whether it was investigating the matter.

Hog’s Breath Cafe founder and company director Don Algie with mascot Hogster at the cafe, which celebrated 30 years in 2009.

An FTI Consultant spokesman told NCA NewsWire the “insolvent trading claim is still active”.

The ASIC-lodged report also found unpaid superannuation for Cleveland and Airlie Beach stores totalled $26,941, while Packapigs was owed $365,000 from a loan to Hog’s Express Brisbane.

“The director has advised that Hog’s Express Brisbane ceased trading in September 2018 and does not have the capacity to repay the loan amount,” the report stated.

Hog's Breath at the inner Brisbane suburb of Petrie Terrace closed after 26 years. Four restaurants have closed in the past four months. Picture: Jeff Camden

RECENT HOG’S CLOSURES

At its peak, there were more than 80 Hog’s Breath restaurants, although that number has almost halved with four closures in the past four months.

The cafe at Palmerston, NT, shut in February, the restaurants at Carindale and Albury closed in January while the Canberra Civic restaurant packed up in December.

When an inner-Brisbane store closed its doors after 26 years at The Barracks in Petrie Terrace in 2018, Mr Worth said the restaurant chain was well-placed for the future.

“There’s no doubt times are challenging and as business owners we need to evolve and make sure our business suits the requirements of the market,” Mr Worth said at the time.

Hog's Breath Founder Don Algie and his partner Ginger White, with Toowoomba franchisee Scott Easterman (centre). Mr Algie and Ms White bought back the franchise arm of the business.

HOW MANY RESTAURANTS REMAIN

There are still 47 restaurants open across the nation under Steve Spurgin, who replaced Mr Worth as CEO, the company said in a statement.

“HBC Management bought the Hog’s Breath Café franchise system from HBCA in October 2020 with 47 stores, all of which remain open,” the company said in a statement issued to NCA NewsWire.

“HBC Management is now wholly owned by original Hog’s owners Don Algie and Ginger White.”

Mr Spurgin said HBC Management could not comment on any dealings before October 2020.

“HBC Management, the owners of Hog’s Franchise System, is very confident that the brand will expand over the next five years,” Mr Spurgin said.

“The current owners have a planned regeneration of the brand that will reinforce the loyalty of its existing customers and attract old and new customers to enjoy its great steak and ‘Hogspitality’.”

Mr Worth was contacted through HBC Management, but declined to comment.

Originally published as Liquidators raise concerns over company that ran Hog’s Breath Cafes trading while insolvent