Whitegoods retailer Clive Peeters has collapsed into voluntary administration with about $160 million in debt, leaving the fate of thousands of customer orders up in the air.
The collapse comes after a tumultuous period for the company, during which profits and revenue have slumped and it was hit by a shocking case of alleged fraud, in which a payroll officer was accused of stealing millions from the group.
Clive Peeters’ shares were suspended early on May 19 after the company revealed it was in discussions with its financiers.
But shortly around 13:00 AEST, the company informed the market that the directors had called in administrators Colin Nicol, Keith Crawford and Matthew Caddy of insolvency firm McGrathNicol.
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A short statement released by the administrators said they are conducting an “urgent” appraisal of Clive Peeters financial affairs to determine how the company came to end up in insolvency.
The administrators are also investigating whether the company can be preserved, either through a deed of company arrangement or a sale.
“We are mindful that many stakeholders will be affected by the appointment of voluntary administrators to Clive Peeters, including employees, suppliers and other creditors, customers and shareholders,” Nicol said in a statement.
“It is hoped that the business can be stabilised and can continue to trade in one form or another beyond this administration. In the circumstances, this would represent the best outcome for all parties.”
A first meeting of the creditors will take place no later than May 28, with more details to be provided over the next few days.
Clive Peeters’ financial report for the six months to December 31 shows the company had total debt of $160 million at December 31, while revenue fell 5.32% during the period to $252.5 million and the company posted a loss of $424,000.
But a deterioration in the retail market – mostly due to rising interest rates and the fading impact of the Government’s stimulus payments – hit the chain hard in early 2010.
In a trading update released on May 4, chief executive Greg Smith said the company posted an un-audited loss of $4.5 million for the three months to March, and noted that sales in April had deteriorated further.
“The combination of very subdued sales and margin pressures will materially impact the trading outlook of the Company over the second half of 2010, despite the Company’s successful cost reduction program which it implemented over 2008-09 and has maintained over 2009-10 to date,” Smith said at the time.
It appears this further sales slump has killed any hopes of Smith and his management team turning the business around.
One bright spot for Clive Peeters in the last few months is that it had managed to recover most of the money misappropriated in the alleged fraud.
That scandal broke in August 2009, when Clive Peeters launched action in the Victorian Supreme Court against employee Sonia Causer, claiming the payroll officer falsified entries in the company’s payroll accounts, transferred cash from Clive Peeters’ bank accounts to her own account and used the money to buy 41 properties worth just under $20 million. The case is continuing.