# Foodora enters into administration despite claims it was 'solvent'



## Hugh G (Sep 22, 2016)

*Foodora enters into administration despite claims it was 'solvent'*

By business reporter David Chau
17/08/2018 5pm
http://www.abc.net.au/news/2018-08-17/foodora-enters-into-administration/10133620

  
*Photo:* Foodora announced its withdrawal from Australia at the start of August. (Facebook: Foodora) 

Delivery food company Foodora has entered into voluntary administration, two weeks after it told the ABC it was "solvent".

"While Foodora's intention was to wind down its affairs in Australia in an orderly fashion and with the support of its parent company [Delivery Hero] to meet all known liabilities, the company has been faced with significant external challenges," Shelley Borstein, of administrators Worrells Solvency and Forensic Accountants, said in a statement.

"These have impeded the company's ability to implement a solvent wind-down of its affairs."

Two weeks ago Foodora announced it would pull out of Australia by August 20.

At the time, a spokesperson from the company said the reason for its departure was to "shift [its] focus towards other markets where the company currently sees a higher potential for growth".

Foodora even told its workers in an email that it had sufficient means to continue paying them.

"As the business is solvent, shifts will be available as per normal until 10th August 2018," the email read.

*Company facing two lawsuits*
Foodora is currently being sued in two lawsuits - by the Fair Work Ombudsman and the Transport Workers Union - which allege the company systematically underpays and exploits its delivery riders.

"The voluntary administration process offers the company essential breathing space, including a statutory moratorium on claims against the company," Ms Borstein said.

Even if Foodora were to defend the cases and lose, it appears unlikely it would be in a position to pay any penalties or compensation.

In a statement, the Fair Work Ombudsman said it had "learnt in the media this afternoon that Foodora Australia Pty Ltd has appointed an administrator".

"We are considering this development and its impact on our matter before the court."

Last month Icce Mejia, along with other Foodora riders, told the ABC about Foodora's "oppressive" policy which pits riders against each other in a "survival of the fittest" contest.

"I knew there was something fishy about the lame argument they were going to focus on new pursuits," Mr Mejia said.

"They probably can't afford all the pending trials so they had to close down."

Mr Mejia was demoted to the bottom of Foodora's hierarchy after he was hit by a car during a delivery, leaving him unable to work for weeks.

Foodora refused to pay for his medical expenses because they considered him an "independent contractor" - his own boss in other words - rather than an employee.

This competitive hierarchy is called "the Batch", and it ranks workers according to who delivers the most food, works the most weekend evening shifts, and puts in the longest hours.

*Email reveals management were aware of legal risks*
Even before the Fair Work Ombudsman sued Foodora for "sham contracting" - misclassifying employees as independent contractors - the company's senior management was aware of the legal risks it faced.

In a leaked internal email between Foodora managers seen by the ABC, a Foodora manager wrote in March that the riders' contracts were "concerning from a legal perspective".

That manager, who is also a former lawyer, wrote: "It is illegal to misrepresent an employment arrangement as an independent contract for the purposes of giving a company more control and power in making decisions over its workers."

"Our rider contracts have many key words in them that would blur the lines between employment and contractor arrangement. It is concerning.

"If a legal authority looked into this, there would be a chance they would consider the contracts as a breach and categorise them as 'sham contracts'.

"Penalties for this are up to $32,000 per contractor.

"If just one rider laid a successful case it would be devastating for us and could cause a dominos [sic] like effect with law suits."

The source who provided that email asked the ABC not to identify the Foodora staff who sent and received that internal email.

Foodora and Worrells have been contacted for comment.


----------



## Krusty (Jan 26, 2018)

I think eventually all those fat lazy junk food eating arseholes out there are going to have to get their own food.


----------



## Hugh G (Sep 22, 2016)

*Foodora fallout: ATO comes after failed food delivery company for unpaid taxes*

By business reporter David Chau
1 pm 28th Aug 2018
http://www.abc.net.au/news/2018-08-28/foodora-fallout-taxman-chasing-delivery-food-company/10172650

  

*Photo:* The ATO and Revenue NSW have come after Foodora for unpaid taxes. (Wikimedia Commons: public domain) 
*Related Story:* Foodora enters into administration despite claims it was 'solvent'
*Related Story:* Foodora to pull out of Australia later this month
*Related Story:* Foodora dishes out punishment to injured riders in 'oppressive' policy

Foodora's administrators have revealed another reason why the failed food delivery company decided to pull out of Australia.

The taxman is coming after Foodora for outstanding debts, in addition to two lawsuits by the Fair Work Ombudsman and former delivery rider Josh Klooger.

In early August, the company told the ABC it was "solvent" and was leaving Australia to, "shift [its] focus towards other markets where the company currently sees a higher potential for growth".

But two weeks later, Foodora said it had entered into voluntary administration because it was "faced with significant external challenges", but would not explain what they were.

Now the creditors' report from administrators Worrells has revealed Revenue NSW began investigating the company five months ago for unpaid payroll tax.

*Foodora's unpaid taxes*
Revenue NSW's verdict is that Foodora's riders were actually common law employees and, "its delivery riders attracted Payroll Tax" under NSW law, according to the report.

  
*Photo:* Foodora's liabilities, totalling $28.3 million, far outweighs its $566,671 in assets, according to Worrells' creditors report. (Worrells) 

This is despite Foodora repeatedly insisting the riders were independent contractors.

The way Foodora classifies its riders - as employees or contractors - is important because it drastically affects the size of its tax bill.

Foodora is also being chased for outstanding superannuation, penalties and interest by the Australian Taxation Office (ATO).

"The ATO have now advised that they are in the process of raising an assessment for outstanding PAYG [Pay As You Go] and Superannuation for the period 1 July 2015 through 30 June 2016 along with penalties and interest," Worrells wrote.

"They have requested further information and have advised that they will be completing an audit for the subsequent years now applying their position.

"Whilst we have not received confirmation in writing to date, their advice appears to suggest that they have now deemed the subcontractors to be employees."

*Debts expected to surge*
The report also discloses the extent of Foodora's weak financial position.

Its total assets are currently worth $566,671 (most of it being cash) - while its liabilities are $28.3 million (with most of it being due to "associated loans").

However, those figures do not include Foodora's tax debts or unpaid wages to delivery riders.

"The company's position is that all employees have been paid their entitlements in full," Worrells said in its report.

"However &#8230; there are a number of disputes surrounding the basis upon which the delivery riders were engaged by the company."

Media player: "Space" to play, "M" to mute, "left" and "right" to seek.

*Video:* Foodora accused of underpayment and sham contracts (The Business) 

The Transport Workers Union (TWU) is highly critical of Foodora's decision to leave Australia amid its mounting debts.

"Not only were Foodora ripping off riders for years, it has now been confirmed they were ripping off taxpayers," TWU national secretary Tony Sheldon said.

"Instead of paying its taxes the company decided to cut and run, potentially leaving millions of dollars unpaid."

"The Federal Government must be held to account for its gross lack of oversight," Mr Sheldon said.

"It has stood by and allowed our community to be ripped off, introducing eighteenth century working conditions via an app. It has allowed taxes to go unpaid."

The union has sent a letter to Industrial Relations Minister Kelly O'Dwyer, urging the Government to force Foodora to set up a compensation fund for delivery riders and to pay any outstanding taxes before departing Australia.

The ABC has contacted Worrells and Ms O'Dwyer for comment.

The first creditors' meeting is scheduled for Wednesday at 11:00am (AEST) in Sydney, Melbourne and Brisbane.


----------



## Who is John Galt? (Sep 28, 2016)

.
Thanks Hugh.

.


----------



## Hugh G (Sep 22, 2016)

$28million in "Associated Loans" !!!

Interest to service these loans, presumably offshore, would result in no profit on the books - little possibility of any Australian Tax revenue.


----------



## Hugh G (Sep 22, 2016)

Click link for full article

------------------------------------------

*Foodora unable to repay Australian debts, as it owes $28 million 'loan' to German parent company*

By business reporter David Chau
6:30 pm, 29th Aug 2018
http://www.abc.net.au/news/2018-08-...n-debt-owe-28m-loan-to-delivery-hero/10179184
*Very few options for the workers*
Foodora's administrator, Worrells, has told the ABC that the delivery riders

This means they are among the "last in line" to be paid any outstanding wages or debts.

In normal circumstances, when a company goes out of business, its employees can claim taxpayer-funded compensation from the Fair Entitlements Guarantee (FEG).

But Foodora, along with its competitors, hires the riders as independent contractors, not employees.

These companies require the riders to sign contracts stating they are, essentially, operating their own businesses and are "their own boss".

Foodora's riders, therefore, cannot claim compensation from the FEG, a spokesperson from the Department of Jobs and Small Business told the ABC.

Most of the delivery riders that the ABC has spoken to (across Foodora, Uber Eats, and Deliveroo) are international students.

Even if they are ultimately considered "employees" under the law, they face another hurdle. They can only claim FEG compensation if they are permanent residents or Australian citizens


----------



## Jack Malarkey (Jan 11, 2016)

State government revenue agencies chasing payroll tax is a new and interesting twist in all of this. So the Australian Taxation Office is not the only revenue agency in this game.


----------



## UberDriverAU (Nov 4, 2015)

Jack Malarkey said:


> State government revenue agencies chasing payroll tax is a new and interesting twist in all of this. So the Australian Taxation Office is not the only revenue agency in this game.


Workers compensation authorities will be chasing after money too.


----------



## fields (Jul 11, 2016)

Jack Malarkey said:


> State government revenue agencies chasing payroll tax is a new and interesting twist in all of this.


The payroll tax issue has caught out many businesses using sub contractors.


----------



## KITT (Mar 28, 2017)

fields said:


> The payroll tax issue has caught out many businesses using sub contractors.


Will this affect Uber and how?


----------



## Jack Malarkey (Jan 11, 2016)

KITT said:


> Will this affect Uber and how?


Payroll tax is a state government tax imposed on the payrolls of employers. The tax is paid by the employer rather than the employee.

It's not clear at this stage whether this affects Uber. The relevant state revenue agencies would need to conclude that Uber drivers were employees of Uber.

The Australian Taxation Office has concluded that Uber drivers are not employees. I have seen nothing to suggest that the state revenue agencies have reached a different view.

That said, if a court were for whatever reason to conclude that Uber drivers were employees (and this cannot be ruled out), the Australian Taxation Office and the state revenue agencies would need to reconsider their position.


----------

