Nosh closure would be bad news for small-scale suppliers - expert
Small New Zealand suppliers could lose out if gourmet supermarket Nosh is forced to close up shop.
Veritas Investments, which owns Nosh, is under orders from ANZ Bank to either arrange a sale of the supermarkets by mid-January or close the business by March 2017.
Some small suppliers are concerned that they may lose out on accounts owed if the business fails to sell. Many of Nosh's suppliers are small businesses and artisan producers who may not be protected through the Personal Property Securities Act.
But Tim Cook, chair of Veritas Investments - which owns Nosh - says for now it is "business as usual", which means "meeting all expectations of a listed business".
When asked how likely he thought a sale would be, Mr Cook responded that the question is "impossible to answer". He says, however, that there is "renewed interest" in purchase of the gourmet supermarket.
Mr Cook told media on Wednesday that the agreement with ANZ Bank stipulates that Veritas must arrange an unconditional contract for the sale of Nosh by January 15.
That could be a tall order, according to University of Auckland Professor of Commercial Law, Michael Gedye.
Mr Gedye told Newshub it would be "extremely difficult to get a deal like that across the line by mid-January, unless there are potential buyers they are already in negotiations with".
As for whether suppliers could lose out, Mr Gedye says that's a likely scenario for small businesses that aren't protected through the personal property securities regime, but he says it's not too late to prevent losses on future deliveries.
"Unless a supplier has taken the prudent steps required under the Personal Property Securities Act to protect its interests, the supplier is unlikely to recover much if Nosh's bank appoints a receiver or if a liquidator is appointed," Mr Gedye says.
"But if a supplier has been prudent and protected itself through the personal property securities regime, it should at least be able to recover any stock still on hand that it has not been paid for. And it is not too late for suppliers to protect themselves for future supplies, either by rushing out now and completing the steps required by the Personal Property Securities Act or by demanding cash on delivery."
The personal property securities regime can seem complicated for small businesses, but Mr Gedye says it's well worth navigating.
"The New Zealand law in this area is as good or better than anywhere else in the world and in comparison to the benefits suppliers get, the required steps are really quite cheap and straightforward.
"Although I am sympathetic to any small business that loses out when one of its debtors goes bust, I am constantly surprised by how many businesses don't bother to take the simple steps necessary to reduce the risk of not being paid for goods they have supplied. Although I am sympathetic to any small business that doesn't get paid when one of its debtors goes bust, if a business is prepared to take this risk, it must be prepared to suffer the consequences."
Nosh stores were purchased by Veritas Investments in 2014, with help from a $5 million loan from ANZ Bank. Veritas has struggled to get the supermarkets turning a profit.
A supplier who approached Newshub said since Veritas Investments took over Nosh, accounts had been paid on a regular basis. Under previous management, the supplier claimed it could take "months" to receive payment.
Angela Weeks, general manager of sales and marketing at Lewis Road Creamery, which also supplies Nosh, said all its accounts are up to date, and it will continue to supply products "on the assurance that they manage their account responsibly."
"We wish them luck getting trading through these difficult times."