The liquidator of art supplies retailer Riot Art & Craft has confirmed the e-commerce arm of the business was sold to a “related entity” prior to the business collapsing.
Riot Art & Craft closed its 56 stores last week, after entering liquidation and informing staff members via text message that they no longer had jobs.
A message posted on the Riot Art & Craft website claims the e-commerce part of the business is continuing to trade “under new management”, however, former employees of the business have questioned the independence of the new owners.
The online Riot Art & Craft business is now operated by a company called Riot Stores Pty Ltd.
According to the Australian Business Register, Riot Store Pty Ltd has been active since January 2020. The terms and conditions page on the Riot Art & Craft website also refers to another entity, a trust, which has been active since April 2020.
Liquidator Nicholas Giasoumi of insolvency firm Dye & Co was appointed to manage the liquidation of SLKALT Pty Ltd, the company that operated the Riot Art & Craft business, on October 19.
On Wednesday, he confirmed to SmartCompany the company entered into a “sale agreement in April with a related entity to purchase the e-commerce business being operated by the company”.
This related entity has “common directors” with SLKALT Pty Ltd, Giasoumi confirmed, although he declined to disclose who those directors are.
It is believed the intellectual property assets of the company were part of the sale, including the Riot Art & Craft name, but Giasoumi confirmed no bricks-and-mortar stores were sold.
The details of the sale will now be reviewed by the liquidator, although he says at this stage it appears an independent valuation was completed prior to the sale and it “looks to have been done above board”.
“There is nothing to suggest creditors have been disadvantaged,” says Giasoumi, although a proper investigation will still be conducted.
SmartCompany contacted SLKALT Pty Ltd director Michael Kurc for additional comment but he referred all questions back to Giasoumi.
In the past week, former employees of Riot Art & Craft have spoken out about their shock at learning about the store closures via text message, as well as about repeated reassurances more stock was coming to fill near-empty shelves.
“They kept reassuring us, even the week before the director actually sent us an email, saying stock was on its way,” former employee Sophie Newcome told nine.com.au.
“The thing that makes me most angry is that for the past few weeks we have been going in to work like normal, expecting to get paid, but we weren’t.
“That’s after the last fortnight of standing in what was almost an empty store telling customers that stock was coming in this week.”
This article was updated at 8am on Thursday, October 29 to include additional information about Riot Stores Pty Ltd.