Jan Cameron’s Retail Adventures lost $114 million over the past three years and owed trade creditors $96.9 million when it went into voluntary administration this month, according to a report by administrators Deloitte at a creditors’ meeting yesterday.
Cameron, who founded Kathmandu, told creditors ongoing operating losses over the past three years and excessive operating costs made her place the company into administration. But she also says she wants to buy the business back either outright or through a deed of company arrangement.
She is a secured creditor of Retail Adventures, while there are 1,700 unsecured trade creditors and 318 landlords.
Cameron will continue to run 238 of the discount chain’s stores, which include Sam’s Warehouse and Crazy Clark’s stores under a licence agreed with the administrators Deloitte, while 32 Go-Lo, Crazy Clark’s and Chickenfeed stores will close.
Vaughan Strawbridge, partner at Deloitte, received criticism from creditors at the meeting for the licensing scheme which the administrators have used to placed Retail Adventures in a new holding group.
This holding group, known as DSG, licenses the Retail Adventures name and associated brands from the administrators so it can continue trading while at the same time the management or other parties can consider coming up with a scheme of their own to put the company back in business.
DSG is in negotiation to buy stock to keep the remaining stores open over Christmas. However, creditors and suppliers questioned the scheme, saying they are unsure how they’ll get a return under the structure.
Strawbridge told creditors he could offer no guarantees or indemnities and suppliers had to come to their own conclusions about their relationship with DSG.
The Australian Financial Review reports that Strawbridge said the licence agreement with DSG was the best way to keep the company trading and preserve value for creditors and staff.
“We are not precluding a sale to another interested party and will run a sale process,” he said.
Kevin Moore, the chief executive of retail marketing firm Crossmark, told SmartCompany while Cameron’s move may not be popular, nobody else had stepped in to buy the business.
“It is difficult in retailing at the moment but the suppliers who chose to supply have been paid the vast majority that they paid the goods for, they now have a choice again to say, ‘will I choose to deal with this company?’ – that is their choice,” Moore says.
“The process of administration around the world is around people taking risks every day in business; that is why I wish them the best to try and save jobs.”
Moore says the licensing scheme set up by Deloitte simply reflects the tough retail environment.
“I think that just reflects the market as it is. A brand as well known as Dick Smith had one buyer; everybody is frightened of investing in retail,” he says.
Moore says he understands creditors’ concerns about the structure the administrators have used but he says the retail sector is suffering problems at a national level.
“Suppliers are rightfully concerned because they run businesses but by the same token there are employees also involved, there are so many people involved when a business goes bad that emotions run high.”
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