The receivers of embattled discount chain Retail Adventures say it is “extremely unlikely” that they will find a buyer for most of the business.
The admission comes as KordaMentha announced the closure of another 22 Crazy Clark’s and Sam’s Warehouse stores in New South Wales, Queensland and Victoria by August 10.
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DSG Holdings owner and former BRW Rich Lister Jan Cameron called in voluntary administrators Nicols + Brien on June 30, and David Winterbottom and Rahul Goyal of KordaMentha were appointed receivers on July 1.
The closures include eight outlets in NSW, 10 outlets in Queensland and two outlets in Victoria.
A spokesperson from KordaMentha said in a statement more than 1400 workers have now been affected by closures across the group and the receivers are focusing on selling as much stock as possible in order to pay employee entitlements.
“The receivers hope to be in a position to pay those entitlements—a total of $10 million—by the end of September,” said the spokesperson. “But this depends on stock sales.”
The spokesperson told SmartCompany further store closures are likely.
“It is fair to assume that there will be no buyer of a large number of stores,” says the spokesperson.
“By Sunday week, more than 100 of the 143 stores will be closed and it is likely more store closures will be announced this week and next.”
While the spokesperson says the receivers are “confident” they will be able to pay staff entitlements, it is “too early to say what the outlook is for other creditors”.
At the time of entering administration, DSG Holdings owed in the vicinity of $20 million to trade creditors, although that was a relatively minor component of the company’s debts. Most of the debt is understood to be owed to a number of other companies owned by Jan Cameron, including Bichen Investments.
Cameron, the founder of outdoor clothing chain Kathmandu, bought Retail Adventures out of receivership in 2009 for $85 million, but the discount chain collapsed into administration again in 2012, with debts worth $200 million.
Cameron bought the chain back again in 2013 after striking a $5.5 million deal with creditors and saving the company from liquidation.
However, administrators Deloitte were not impressed 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.