Barretts Bakery, a popular bakery chain based in Western Australia, has collapsed with a debt of $2 million, prompting administrators to urgently seek a resolution to rescue the business.

The Australian Taxation Office is owed the substantial amount. Administrators took control of the bakery chain, established in 1998 in Perth, on July 27.

Solving legacy debt crisis for Barretts Bakery

Mervyn Kitay from insolvency firm Worrells is leading efforts to find a viable solution and save the struggling enterprise.

If a feasible outcome cannot be reached, the bakeries may be sold or liquidated. The pandemic-induced challenges during COVID-19 are cited as the primary cause of the accumulated legacy debt.

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This legacy debt makes company directors liable, according to advice from the ATO, potentially leading to personal financial responsibility for senior management.

The bakery, comprising seven stores in Perth, faces an uncertain future.