Deliveroo was losing about $3 million a month on its Australian operations, administrators KordaMentha found, as revenues slumped this year in the wake of the 2021 pandemic lockdowns.
The company has tabled a Deed of Company Arrangement (DOCA), supported by the trustees, offering a total of $18.8 million to staff, delivery drivers and other creditors.
KordaMentha today released its report to the creditors of Deliveroo Australia Pty Ltd (Deliveroo Australia) recommending that they vote in favor of the DOCA proposed by UK parent company Roofoods Ltd.
Administrator Michael Korda said the DOCA would resolve all claims against Deliveroo Australia fairly and facilitate the company’s timely, efficient and controlled exit.
The proposed DOCA offers $9.5 million to employees, riders, restaurant partners and suppliers, payable next January
An additional $9.3 million is for remaining creditors, due April 2023, paying 100% of claims from restaurant partners, customers, suppliers and other unsecured creditors.
Mr Korda said the DOCA provides for increased ex-gratia payments to Deliveroo’s employees and passengers, “on top of” their statutory entitlements, with employees being paid at 169% of what they owe and passengers scoring an average of 342% of their entitlements . KordaMentha didn’t offer an average grade, but the company had more than 120 employees, served about 12,000 restaurants and hired 15,000 delivery drivers as contractors.
It is assumed to be a fortnight’s wage, based on the average weekly wage over a year, plus a week’s ex-gratia.
Creditors will meet on December 21 to consider the DOCA and the administrators’ recommendations ahead of the second creditors’ meeting.
The delivery company’s operations report reveals the money lost over the seven years of local operations, with average cash losses rising to approximately $3 million per month by 2022.
Covid lockdowns have been good for Deliveroo, with sales up, peaking at $14.9 million in net sales in August 2021. But sales fell this year and continued losses are reflected in a $123 million loan in the local books to Deliveroo’s UK headquarters.
The parent company, listed on the London Stock Exchange, withdrew its support for the Australian operations in mid-November and transferred the company to KordaMentha to excite.
The nine-year-old company. whose share price has fallen by more than 50% in the last 12 months, closure of activities in the Netherlands on 30 November.
This year has been a graveyard for food delivery startups, with Voly, a grocery delivery company in Sydney, closing down last month just 12 months after launching. Rival Send slides shut down in May this year.