BREAKING NEWS: Kleins to close
Wednesday, June 11, 2008/
The 26-year-old jewellery chain Kleins will close in the coming weeks after administrators were unable to find a buyer for the business.
Kleins was placed into administration in early may with debts of $25 million. Franchisees had feared the business was close to collapse, but Stephen Giles, a partner at law firm Deacons, has been working to find a buyer for the chain, and was confident as late as this morning that there were a “several options” for the business.
But administrator James Stewart, of Ferrier Hodgson, says the last potential bidder for Kleins pulled out late this morning.
All of Kleins 35 company-owned stores and 130 franchised stores in Australia will be closed and it is expected that 100 Kleins employees will be made redundant.
“Despite 36 expressions of interest and eight indicative offers being received, once parties proceeded to due diligence it was clear that no one was confident about returning the business to profitability considering the risks and financial commitment required,” Stewart said in a statement. “It is a very disappointing day for staff and franchisees.”
Employees are expected to receive almost all of their entitlements via the Federal Government’s GEERS scheme. Unsecured creditors are not expected to receive any return.
University of NSW associate professor Frank Zumbo, who has been in contact with several franchisees, says the episode will need to be investigated by the Australian Competition and Consumer Commission. “There are very serious allegations of breaches of the franchising code, bullying, unconscionable conduct and mis-management,” Zumbo says.
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