Mundella Foods’ creditors voted unanimously to keep the processor running, albeit with strict conditions

South West dairy empire Mundella will live to sell its range of award-winning yogurt for another day after creditors voted to keep the failed business running. Administrators from Mackay Goodwin were appointed to Mundella Foods, Margaret River Dairy Company and Cheeky Cow (WA) in early June and had recommended the businesses head to liquidation at a creditor’s meeting on July 8. However, a last-minute proposal came from top boss Hayden Russell to restructure the businesses which was up for consideration at a closed creditors meeting on August 22. Creditors voted to keep the three businesses in operation at the meeting which industry stalwarts have labelled “good for WA dairy”. The restructure deal — a deed of company arrangement — will pay unsecured creditors between zero and 68¢ per dollar owed and see outstanding super claims paid in full. It also includes a six month deadline to sell the real estate of the businesses in a lease-back arrangement. Mr Russel has also committed to stepping down and bringing in a new general manager following the finalisation of the deal. “Under the plan we’ve got going forward, I think that they (the creditors) will get a reasonable return, not quite 100¢ in the dollar, but it will be significant,” he said. “Mundella and Margaret River Dairy Company will be strong coming out the other side and be sustainable into the future, to make sure that we never end up in a position like this again, which is very important.” WAFarmers Dairy Council president Ian Noakes said the decision to keep the businesses afloat was good for the State’s dairy industry. “We need some diversity in our processors and they’re making products, especially Mundella, that the public enjoys and is looking for,” he said. Mr Noakes said he believed the company’s key issue moving forward would be securing a milk supply, particularly when exclusive milk supply contracts had already been locked-in for the year ahead. “None of the main processors will want to give them any milk so they’re going have to find what they can themselves because we’re quite a way down in production, so the milk supply is getting tighter,” he said. “So hopefully they can get a milk supply and trade out of trouble. That would be a good outcome.” However, Mr Russel said he was optimistic milk supply would not be an issue given he was willing to offer farmers 90¢/L. “We’re about to sign a second farmer imminently and, at 90 cents a litre, it’s a sustainable price into the future for the dairy farmers,” he said. “It will give us an initial amount of milk to make us sustainable. “We really want to make sure that the dairy industry is sustainable as well as us.” Mr Russell first entered the WA dairy industry as a first-generation dairy farmer in 2019 running Jerseys and Holsteins before he began to bottle his own milk under the Cheeky Cow Dairy in 2022. In late 2023, the Busselton farmer expanded by purchasing yoghurt producer, Mundella Foods, and Margaret River Dairy Co out of administration. They had previously been owned by Chinese food giant, Bright Foods Group. The dairy group’s demise sparked hot debate following concerns a milk shortage had torpedoed the businesses. Mundella boss Hayden Russell told the Countryman the company had never been able to secure enough milk to run at capacity — after he led a consortium to buy the business out of an earlier administration in late 2023. Mackay Goodwin’s report listed tough financing terms, a lack of milk, ongoing losses, and poor financial controls and strategic management, as contributors to the business’s failure. Administrators also claimed the companies had been “not adequately aware” of responsibilities for staff superannuation.