Strathfield rises out of administration
- 06 March, 2009 17:31
- Comments 5
Strathfield Group creditors have declared the embattled retailer has pulled itself out of voluntary administration through the approval of a Deed of Company Arrangement (DOCA).
The retailer went into voluntary administration in January blaming weak Christmas sales, a poor retail outlook for 2009, and a decline in working capital.
The DOCA includes a deed fund totalling $2.8 million. All employee entitlements will be paid out to staff that were made redundant or resigned because of store closures before and during the administration process. It also includes a guaranteed minimum sum of $500,000 to unsecured creditors.
The control and operations of the company have been returned to a new board and management, while $40 million of external debt has been removed from the company’s balance sheet.
According to a statement on the ASX, Strathfield will adopt and implement a new franchise model. Additional internal restructuring involving the closure of unprofitable stores is expected to save $1.2 million per month in expenditure.
In the statement, chairman, Vaz Hovanessian, said the emergence from voluntary administration had saved 300 jobs.
In February administrators revealed the company owed creditors more than $37 million in addition to facing more than $150 million in claims by Optus and Clear Communications.
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Comments
Anonymous
Will it work?
It's nice to hear some good news regarding companies in trouble. Even so, I do have to wonder whether or not this whole new approach will save Strathfield in the long run or is this just a band aid to deal with the immediate threat of closure. Despite clearing up a portion of their debt, they still owe a lot of money.
Anyone else have an opinion about this?
Anonymous
Strathfeild
Sounds like another con job to defraud creditors and small shareholders out of money for the benefit of the shady characters running the business for a long time.
This is now the third or fourth resurrection of this company in the past 25 years.
A true AUSSIE ICON and shows how con artists get away with it over and over again!!
kwestlake
Insider's view
I work for Strathfield. The new exec team is very definite that the new model will work. This is clear to me from the investments they've made to date and are planning for the year ahead. If they had gone into liquidation creditors would have got nothing. Now they have a continuing revenue stream with a functioning business. I for one believe that with the new management and new approach, it's going to succeed.
Anonymous
It will sink. Just watch.
Anonymous
I used to work for strathfield but our store was closed. I know every report says that staff will be paid in full but trying to get an answer out of them about when we will be paid is impossible. Staff were not even given seperation certificates so cannot claim unemployment benefits to get by. Its really not good enough
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