Of all the recent business collapses in Australia, none have generated as much public emotion as that of Sara Lee. Administrator FTI Consulting has now detailed how the beloved dessert-maker was saved. 

Synonymous with frozen baked desserts, the sense of loss among Australians was palpable when news broke last year that Sara Lee could be going bust, another victim of skyrocketing overheads and the cost-of-living crunch.

Prominent turnaround figures Vaughan Strawbridge, Joseph Hansell and Kathryn Evans of FTI Consulting had been called in as voluntary administrators, and quickly got to work to rescue the beloved brand along with over 200 jobs.

Yet, they were faced with significant challenges from the get-go, not least of which was the 90 percent of the company’s finished products sitting in the warehouses of third-party suppliers who were owed significant sums of money – at a time when many Australians were rushing out to buy some of their Sara Lee favourites. Getting supply up and running again was a foremost priority.

Working with creditors

To do so, with no savings to draw on, the FTI Consulting team would first have to explain the administration process to a number of creditors who were owed significant money and were rightfully upset, before then having to contend with the day to day ups and downs of operating a manufacturing and headwinds of machinery breakdown. Hansell says prioritising spend to address the issue was of critical importance, along with reassuring stakeholders.

Vaughan Strawbridge, Joseph Hansell and Kathryn Evans

Here, it can be seen how the consultancy’s various practices holistically come together on a single project. As FTI’s finance & restructuring trio of administrators were busy at work salvaging the business, the firm’s transformation team examined solutions to deliver a turnaround, while its strategic communications division was providing the messaging to give comfort to Sarah Lee staff.

Strawbridge says FTI was hands-on in its approach; “We had a team on site dedicated to supporting management in trading the business, as it was really important for us to demonstrate to interested parties that Sara Lee could be profitable. But we saw a huge opportunity, which was around preserving an iconic brand, but more importantly saving as many of those jobs as we could.”

Back to future success

That goal was ultimately a successful one, with operations at Sara Lee’s production facility in the New South Wales town of Lisarow continuing uninterrupted throughout the almost four-month administration period until the company’s sale to CJ Quinn Group in January, and employee entitlements remaining in full for its more than 200 workers whose jobs had been preserved.

In addition to the manufacturing and supplier challenges, other issues FTI had to overcome while managing daily operations and conducting a campaign to sell the business through a competitive process included an unsustainable capital structure, rising raw material costs, and ongoing supply chain disruptions, along with complex negotiations over intellectual property rights.

“We are so grateful to the loyal workforce and management team who have made this process a success while continuing to produce amazing products,” Strawbridge said upon the sale, further thanking suppliers and customers for their vital support in rallying behind the business during a tough time. “Sara Lee is an iconic brand and category leader, and we look forward to its future success.”