NZX-listed Veritas Investments is suing the buyer of grocery chain Nosh, alleging it failed to meet obligations to pay $1.9 million to Nosh creditors.
In a statement to the NZX, Veritas chairman Tim Cook said the failure to pay Nosh’s creditors was a breach of the sale and purchase agreement.
“We entered into this transaction in good faith after a rigorous process and it is extremely disappointing that the directors of Gosh Holdings Limited (now Nosh Group Limited) have clearly failed and continue to fail to meet their financial and legal obligations.”
The Nosh chain was acquired by Gosh Holdings, since renamed Nosh Group, in February, but quickly ran into difficulty with suppliers after missing promised payments.
The stores were closed today and staff left unpaid after further finance did not materialise.
Veritas said it was itself a creditor of Nosh Group to the amount of $68,549, which is owed for meat supplied through the Mad Butcher.
It said at the time of sale the amount owed by Nosh to creditors was $1.9 million, which the new owner had agreed to pay.
Although Veritas is suing Nosh Group, creditors owed money by the chain while it was under Veritas ownership are entitled to seek recovery from the Veritas subsidiary.
Veritas acknowledged that those obligations remained with its subsidiary, now named Old NGL. However, “Veritas is not a guarantor and so has no financial exposure. Old NGL Limited has no assets to meet the creditor payments that Gosh Holdings Limited (now Nosh Group Limited) committed to pay.”
Several suppliers have told NBR they are considering suing Old NGL to recover money owing.
Mr Cook said in taking legal action Veritas was enforcing its contract with Nosh Group.
“We are asking them to meet their obligations,” he said. “It’s not about us getting $1.9 million off them. So in a way we’re hopefully helping the creditors of Nosh.”
Mr Cook said the legal action had been filed to the high Court today.
“You have to assume they’re not going to front up with a cheque for that amount of money,” he said.
At the time of the Nosh sale, the buyers had provided documentary evidence and undertakings they had enough money to pay the creditors, said Mr Cook, “so in good faith we continued.”
Nosh Group director Andrew Phillips has not returned calls seeking comment.
Mr Cook said he had last spoken to Mr Phillips about 10 days ago. Veritas’ legal adviser Harmos Horton Lusk had subsequently sent documents to him putting him on notice, he said.
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