Embattled surfing fashion retailer SurfStitch has appointed administrators to its listed entity and holding company after several “significant, external challenges”, the company told shareholders this afternoon.
The company’s directors have appointed FTI Consulting to two of the retailer’s entities, Surfstitch Group Limited and SurfStitch Holdings Pty Ltd.
In a statement, the ASX-listed business said it had made the decision after a number of challenges for operations, including “two Class Actions, protracted litigation and an ASIC investigation which have brought high levels of uncertainty impacting the companies’ trading position”.
“The Administrators have been appointed with the intention of preserving value for stakeholders in the business whilst recapitalisation options are pursued,” the company confirmed.
The group’s online retail companies, including the Australian SurfStitch operations, UK’s Surfdome business and the US imprint Swell are unaffected by the appointments and will continue to trade as normal.
“The legal proceedings against the Non-Operating SurfStitch Companies will be stayed following the appointments, which will provide the Group with breathing space to focus on trading into the critical December peak period,” administrator John Park said in a statement.
The administrators will be investigating the possibility of a recapitalisation of the non-operating companies that have been placed in administration.
SurfStitch announced in May it was planning on closing US operations by 2018, warning investors of further losses due to challenges in the “general business environment”.
In a statement to the ASX, company chairman Sam Weiss said the appointment of administrators would “allow our operating companies to focus solely on trade and the provision of a rewarding experience for our customers going into the critical December peak period”.
More to come.