The owner of the Australian book selling chains Borders and Angus & Robertson has been placed in the hands of administrators, less than 24 hours after Borders in the US filed for chapter 11 bankruptcy protection.
Ferrier Hodgson was appointed as the company’s administrator late on Thursday afternoon. Partner Steve Sherman is handling the matter.
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RedGroup Retail were contacted but a spokesperson declined to comment.
The first creditor’s meeting will take place within eight working days of the collapse.
So far reasons have not been given for the collapse, but the book industry has been hit hard by falling consumer confidence, a spending shift towards online book sellers and the rise of eBooks.
RedGroup Retail is also believed to be carrying a substantial level of debt. RedGroup operates both the Borders and Angus & Robertson chains in Australia. The Angus & Robertson chain alone has over 100 stores with 60 franchises, with the chain operating in Australia since the 1800s.
Borders opened its first store in Australian in 1998, and has since expanded around the country.
The appointment comes after Borders filed for bankruptcy in the United States overnight. The company said 30% of its stores are unprofitable and losing about $US2 million a day.
The Australian operation is not financially related to the Borders chain in the United States.The collapse comes after a tumultuous few months for RedGroup Retail.
Despite preparing the company for a float or trade sale, last October managing director David Fenlon resigned after the company unveiled a full-year loss of $43 million for the 2009-10 year.
The company, which is owned by private equity group PEP, was also forced to get a waiver from its lenders after breaching some of its financial covenants. The company employs about 2500 people. Both chains are expected to continue to trade while administrators assess the financial position of the company.