Mad Butcher legal knives sharpened

The owner of the Mad Butcher franchise and the liquidator of the chain’s Mangere store could end up in court as lawyers become involved in what has been called a ‘‘ridiculous crusade’’.

This comes after liquidator Peter Jollands criticised Nzx-listed Veritas Investments, which bought the Mad Butcher in 2013, for failure to provide documents, while Veritas claims the liquidator has not done his job properly.

The dispute related to the Mad Butcher store in Mangere, which was founded by Sir Peter Leitch in 1971. The store went into liquidation in July.

Jollands came out criticising what he called an unworkable business model for franchisees, but in his second report has taken his claims further, accusing Veritas and the Mad Butcher of failing to provide company records and noting the business was being investigated.

It said he had received financial reports from a ‘‘source’’ for Mangere East Meats Ltd (MEML), Leitch’s company and the owner of the Mangere store before its sale in 2013. ‘‘The reports are of concern in that they show that for the years 31 March 2010, 2011 and 2012, MEML had declining revenues with losses recorded in the 2012 year.’’

Jollands said he was taking legal advice and court action was possible.

‘‘The franchisor has not provided the requested company records.’’

Veritas chairman Tim Cook, however, yesterday detailed what he called the facts of the Mangere liquidation and his frustration with Jollands.

He said he could not comment on Jollands’ claim the Mangere store had begun losing money in the years prior to its sale, other than that Leitch had a ‘‘very successful business’’ there.

But he ran through a series of phone calls, meetings and other dealings with Jollands, where the franchisor wanted to find a workable solution for the store’s owner rather than put it in liquidation.

Other stores, such as one in Rotorua, had become one of its big successes after a ‘‘motivated’’ operator took it over using exactly the same business model.

Cook said Veritas offered ‘‘an enormous amount of free help’’ to turn around the Mangere store, including bringing in a proven operator.

The franchisee had admitted in those meetings the failure was his fault, and was a minority shareholder and manager before buying the store outright, Cook said. But the next thing Cook knew, the store had gone into liquidation.

‘‘There are other stores that have gone into liquidation for genuine reasons; the liquidator’s come in, done the job, cleaned it up and gone – not carried on like this … It is a ridiculous crusade,’’ Cook said.

Cook said his advice from Bell Gully partner Murray Tingey and lawyer Andrew Harmos was that everything they were required to provide the liquidator had been complied with.

The liquidator’s second report did not have all the necessary information, and Jollands would shortly receive a letter asking for a full set of accounts, he said.