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Unsecured creditors owed £27.5m in REDgroup collapse
01.03.11 | Bookseller Staff
Unsecured creditors including publishers and other suppliers to Australia and New Zealand's failed bookgroup chain REDgroup Retail are owed some AUS$44m (£27.46m) it has been revealed. Some stores also look set to close.
Administrators for the group, which went into voluntary administration on 17th February, held the first creditors' meetings in Melbourne and Auckland today [1st March], where it emerged that the group's one secured creditor, private equity group PEP, is owed $118m. Retention of title claims by suppliers ‘"will take some time" attendees were told.
Bookseller + Publisher reports that administrators also revealed that some of REDgroup's 231 stores are likely to close, with the first announcements to be made within 72 hours.
The stores [115 Angus & Robertson, 67 Whitcoulls, 31 Borders, nine Bennett's and nine NZ airport stores] have stock on hand worth approximately $120 million. Unredeemed gift vouchers are believed to be worth some $15m.
Administrator Steve Sherman of Ferrier Hodgson told the Melbourne meeting that preliminary estimates show that Redgroup owes its 3,600 staff some $7.8 million in entitlements. He thanked the staff for their efforts and for enduring "a tough few weeks on the shop floor" with more uncertainty ahead.
A new ordering process is now in place for suppliers: orders placed before 17th February are now frozen and any new orders are guaranteed to be paid by the administrators. The businesses are currently being run on a cash-flow basis.
The administrators will now compile a report before a second creditors meeting where vote will be held on either a deed of company to allow the business to keep trading or for it to go into liquidation and for the administrator to sell off all assets. A third option, returning control to the previous REDGroup board, was described as "unlikely" to be recommended.
The meeting is proposed to be held on 24th March, although administrators will apply for a delay to be sought.
Administrators reiterated that Borders Singapore, and Angus & Robertson franchised stores are not included in the administration.