Administrators for Jan Cameron’s Retail Adventures have informed the Australian Securities and Investments Commission the company may have been trading while insolvent.
Administrators informed a meeting of creditors on April 12 they had informed the corporate watchdog of possible breaches.
The administrators reported there is “compelling evidence the company traded whilst insolvent” and they will be receiving advice from their lawyers.
Investigations have also revealed 90% of a $98 million debt incurred by Retail Adventures was formed within five months of the administrators being appointed.
A statement from the administrators emphasised investigations had not yet been finalised and they will “continue to investigate whether RAPL traded whilst insolvent”.
The company’s professional indemnity insurers have also been “put on notice regarding the administrators’ intention to lodge a claim under the directors’ and officer’s liability insurance policy”, according to the minutes from the creditors’ meeting.
SmartCompany contacted the administrators, but they declined to comment further.
Earlier this year, Jan Cameron bought back Retail Adventures, Australia’s largest discount variety store operator, for $58.9 million.
Cameron initially bought the company out of administration in 2009 for $85 million and invested a further $80 million over three years to keep it in business.
While administrators saw this as a positive outcome, managing director Hugh McLernon of litigation funder IMF told SmartCompany in February this year it was disappointed administrators hadn’t conducted investigations into whether the company traded while it was insolvent earlier.
“What we have suggested is that the administrator should have already carried out those investigations.” he says.
In March, litigation funder IMF said it intended to pay the hefty cost of legal proceedings for unsecured creditors who are owed several million dollars.