Former BRW Rich Lister Jan Cameron has agreed to hand over $13.84 million to the previous administrators of her embattled discount retail chain Retail Adventures, after reaching a settlement over claims the company traded while insolvent in 2012.
Deloitte partner Vaughan Strawbridge announced the settlement on Monday, putting a stop to a public hearing into Deloitte’s claims of insolvent trading, preference payments and invalid loans.
The blow to the founder of retailer Kathmandu comes on the same day current receivers KordaMentha revealed a sale of most of the Retail Adventures chain is “extremely unlikely”.
Since the appointment of KordaMentha as receivers of backing company DSG Holdings on July 1, 109 Crazy Clark’s and Sam’s Warehouse stores have been earmarked for closure as the receivers attempt to recover the $10 million owed to staff.
The Deloitte claims relate to Retail Adventures’ activities in 2012, when the chain collapsed into administration with debts worth $200 million.
Cameron, who had bought the chain out of receivership in 2009 for $85 million, bought the business back in 2013 after striking a $5.5 million deal with creditors and saving the company from liquidation.
However, Deloitte was unimpressed at the time, arguing creditors had more to gain from rejecting the offer and making allegations to ASIC that Cameron’s company had traded while insolvent.
Monday’s settlement includes $12.5 million in relation to the insolvent trading claim and a further $1.34 million in relation to preference claims.
Deloitte said in a statement the settlement brings the total amount recovered from the liquidation process to $19.9 million.
Strawbridge said he expects to pay the settlement out as an interim dividend as soon as possible, and assuming creditor claims of approximately $88 million, the dividend will be around 15 cents in the dollar.
Strawbridge said Deloitte was in the process of commencing legal action against directors of Retail Adventures, but he decided to pursue a settlement after taking into account the time it would take to reach a successful outcome in the courts and the ability of Cameron and other directors to pay, as well as the “risks inherent in any litigation”.
Strawbridge said the settlement “resolves all claims” against Cameron and other directors, all of whom have agreed not to receive any payments from the liquidation process.
SmartCompany contacted DSG Holdings and KordaMentha but did not receive a response prior to publication.