Borders and Angus & Robertson under threat as administrator fails to find buyer
Tuesday, May 31, 2011/
The Angus & Robertson and Borders bookstore chains are on the brink of total collapse, with administrator Ferrier Hodgson unable to find a buyer amid continued staff lay-offs.
Ferrier Hodgson has warned the operations will close within weeks if it is unable to find a buyer for parent company REDgroup Retail.
The administrator has said it will consider offers for individual stores – highlighting the severity of REDgroup’s downfall – and will also guarantee all employee entitlements accrued from the date of their appointment on February 17.
“Payment of entitlements accrued prior to the administration is dependent on final stock realisation, which will be known within the next few weeks,’’ Ferrier Hodgson said in a statement.
The administrator said there was no timeframe for the closure of stores, although sources within the company say they have been told it could be between one month and six weeks.
Finding a buyer within a couple of months could prove difficult, with the overall retail industry stagnant as consumers hold off spending or increase their online shopping in their hunt for bargains.
The book trade has been among the most affected by the rise of internet shopping, with comparable products often found more cheaply on overseas websites.
A potential buyer for REDgroup is franchisee-owned Collins Booksellers, which had previously indicated it was aware of the business opportunity and was considering its options. Collins Booksellers chief Daniel Jordon has declined to comment.
Industry sources say Ferrier Hodgson was confident throughout its appointment a deed of company arrangement would be signed.
However, 17 Borders stores and 55 Angus & Robertson stores have been closed since Ferrier Hodgson was appointed to the debt-laden Pacific Equity Partners-owned business in February.
Employee numbers have been whittled down from more than 2,000 since Ferrier’s appointment; the most recent sackings came yesterday with the loss of 34 head office jobs.
Shortly after Ferrier’s appointment, 25 Angus & Robertson stores sought to break away from REDgroup, saying they no longer received the benefits of operating as franchisees.
Ferrier Hodgson responded with legal action, saying it strongly believed the franchisees did not have the right to break their franchise agreement.
A ceasefire was signed last month, with the breakaway stores agreeing to continue trading as franchised stores although expressing a desire to operate as independent entities. The fate of these breakaway franchisees is unclear if Angus & Robertson is shut down.