Red Lea Chickens, who own a 155 hectare poultry farm near Tamworth, were placed into voluntary administration over the long weekend, causing the immediate loss of at least 500 jobs throughout the state.
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While Red Lea did not respond to enquiries, The Leader understands that a large number of local jobs will be lost in the fall-out, after it was revealed by Farmers NSW that the company owed a combined $4 million to 28 poultry farmers around the state.
NSW Farmers CEO Matt Brand said they commenced legal proceedings late last year in an effort to recoup the money before the voluntary administration began.
“We’re disappointed with Red Lea Chickens for not revealing the true financial mess the company was in when it gave solid commitments to farmers that everything was okay,” Mr Brand said.
“This could break a number of farmers whose future now lies in the hands of the administrators.”
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Tamworth councillor Russell Webb believes that the company, which was founded in Blacktown in 1957 and operates over 30 stores, is yet another victim of the ongoing supermarket price wars.
“I understand that they have been in financial difficulties for some time,” Mr Webb said.
“It is a very tight industry at the moment, and the big supermarkets have made it so there is a not a lot of profit to be made.”
The councillor said that there is hope on the horizon for the local workers who have lost their jobs as Baiada, who have taken Red Lea’s remaining birds look to “significantly expand” in the region.
“Baiada are looking to grow and will significantly grow in the region over the next ten years,” he said.
Baiada already have approvals for a major new broiler farms in Manilla, while company Proten are currently in negotiations to build between 56 and 64 new contract chicken sheds with Baiada in the region as well.
“This is very positive for the region, not only is there jobs and opportunities that will come out of the construction and operation of the new sheds, but local farmers will also benefit from a bigger demand for grain – it is positive all round.”
McGrathNicol partners Barry Kogan, Jason Preston and Kathy Sozou have been appointed as administrators for Red Lea, with the first creditors meeting to be held on April 12.
In a statement McGrathNichol said “the immediate focus of the administration is to work with key stakeholders to ensure an orderly wind-down of operations and commence our investigation into the affairs of the Red Lea Group and the reasons for the its failure.”
It has also been reported that Red Lea’s sole director has indicated he intends to submit a proposal for a Deed of Company Arrangement - a compromise between Red Lea and its creditors to avoid liquidation, which would cover outstanding employee entitlements.
