Milking on the Moove Ltd, which traded as Happy Cow Milk Company, was placed into liquidation by a special resolution of shareholders on May 14.
Founder Glen Herud, who is in the process of trying to refine and resurrect his business model, said he was “gutted” and had told creditors he would personally repay them.
Herud started Ohoka, North Canterbury-based Happy Cow to provide an alternative model to intensive dairying. Calves were kept with their mothers for up to 15 weeks and a mobile milker reduced the effluent burden by milking cows in-paddock.
The first liquidator’s report showed, as of May 14, the company could be left with an estimated shortfall of $575,057 once preferential creditors and creditors with specific securities had been paid using proceeds from the sale of the company’s assets, if they met their estimated realisation.
However, the majority of this was classed as bank and credit card debt and money owed to shareholders, comprised almost exclusively of Herud and his family. The entrepeneur said he had sold a piece of land that would be used to pay the bank, which would leave, he claimed, about $100,000 to pay other creditors. Shareholders would be the last to receive anything.
Liquidator Robin Gardenbroek said he could not comment on the $100,000 figure, instead saying “we’re still quantifying what the exact position is, but there’s likely going to be a substantial shortfall”. He said other creditors had come forward since the first report was published.
Herud said he took “full responsibility” for the situation.
“It’s my fault this has happened. I’m disappointed that it’s gone to liquidation. It’s not what’s best for the creditors.”
He said he had asked creditors to wait until he had raised enough capital to form a new company and resurrect the business, at which point he had planned to buy back his original company’s assets for the cost of the outstanding debts.
However, he said one creditor had threatened to apply to the court to place Milking on the Moove into liquidation – effectively forcing the company to undertake the process voluntarily.
It had “thrown a spanner in the works”, Herud said, because “all the assets are going to be sold off and distributed all around and we’re going to have to rebuild everything”.
The business and its milk had been popular with cafes and consumers, but its costs were unsustainable, leading Herud to pull the pin on the project in a Facebook post last month.
“I set out to prove that you can do dairy differently in NZ. But in reality you actually can’t or you can’t without some serious money behind you,” he wrote at the time.
But the ensuing support – a reported 6000 people signed up to the company’s mailing list within 48 hours of him posting – convinced Herud to give it another go and seek funding for a new and improved business model.
It is an idea he remains committed to.
“No-one else is going to set up an ethical dairy farm. No-one else is really as committed to getting rid of plastic out of the milk industry.
“We are still in the process of getting a deal together to relaunch the company on a national scale … there’s a 99 per cent chance it’s going to happen.”
Herud said he was talking to supermarkets, private investors and dairy companies. He was also considering a crowd-funding scheme and had surveyed the company’s more than 10,000 mailing list subscribers to gauge interest.
He expected to be able to put out a plan to supporters late by early next week.
“We’re still 100 per cent committed. We’ve gone too far to stop now. If I don’t make a deal work then I’m basically looking at bankruptcy. So, yeah, we’re going to make it work.”
An admitted failing of the previous business was Herud’s inability to convince farmers to farm to his model, resulting in a shortfall in the cow numbers needed to grow and sustain the business.
However, Herud said a “couple” farmers were now interested. This meant “we won’t be the farmer anymore. We’ll let someone else do the farming and we will concentrate on the distribution and marketing”.
“We’ve learnt what not to do now.”
By: OLIVER LEWIS