The receivers of failed entertainment retailer EzyDVD have started the process of looking for a buyer for the chain and say there has already been strong interest from potential buyers.
Receiver David Kidman from Ferrier Hodgson’s Adelaide office says he will take expressions of interest through to 9 January 2009. He hopes the longer-than-usual expression of interest process will assist potential buyers who might be away during the Christmas break.
“We’ve already fielded a number of inquiries since Wednesday and I suspect we’ll receive more after these advertisements,” Kidman says.
His preliminary investigations have revealed EzyDVD was suffering from the two problems common to failed companies; not enough capital and too much debt.
Kidman says EzyDVD’s expansion into the online movie download market, which founder Jim Zavos announced in June, never had much chance of success.
“In hindsight they just didn’t have the necessary capital to finance the business. A business like that needed several million to get off the ground.”
Kidman says the company has debts of about $18 million.
It has also emerged that EzyDVD went through several management changes in its final months in business. Founder Jim Zavos appointed Barry Taylor as chief executive in March and then replaced him with current CEO Stefan Moro in July.
But despite seeming to hand over control, Zavos remained in the position of managing director and as 100% shareholder retained a right of veto over every decision taken by his CEOs.
Kidman says many of the problems within EzyDVD became clear when Zavos appointed Moro, who quickly moved to try and rescue the chain by selling a number of unprofitable outlets.
Kidman has also revealed that Zavos went on indefinite leave at the start of November as the company moved closure to collapse. Zavos has been informed by the receivers that he is no longer required.
Kidman remains hopeful of finding a buyer for the chain and is encouraged by his early discussions with interested parties.
“How that interest unfolds will pan out over the next two or three weeks. Our job is to try and find a buyer or a number of buyers and get the best return for creditors.”
Related stories:
- EzyDVD collapses into receivership
- Fast forward
- EzyDVD founder resigns as ReelTime Media appoints voluntary adminstrators
