Queensland-based retailer, The Disc Shop, was put into voluntary administration last week. Grant Thornton Chartered Accountants was appointed company administrator on April 11.
The move comes two weeks after a wind-up application was lodged by wholesale supplier, OTC Computer, against the retail chain. According to creditor statements, it is owed $213,000. The largest creditor is Bluekings IT, which is owed $238,000. Total debt is about $2 million.
The Disc Shop was taking legal action against OTC for damages, owner Alan Green said.
He was adamant The Disc Shop would survive the liquidation process.
Green claimed the amount owed was little more than a normal month's trading based on its annual turnover of $20.5 million.
The Disc Shop chain was put up for sale in early March but taken off the market shortly afterwards. Sales agent, Ron Frank, of Business Brokers Queensland, said a decision had been taken to allow a restructure of poor performing stores.
The owners of OTC, which was established in 2001, have been the subject of legal battles in the past. The company is headed up by former principals of defunct wholesaler, Z-Tek, Nelson Wei Zhou and George Guo Hong Zhou.
Nobody at OTC was available for comment at the time of going to press.
While it was early days, administrator, Michael McCann, said there was potential to turn the company around. Plans being considered include selling the business or accepting a deed of company arrangement.
The first creditor's meeting was scheduled for April 19.
Green said company restructuring efforts were underway. It recently closed three non-productive stores - Coffs Harbour, Nerang and Mackay. The remaining seven locations in regional Queensland would be expanded into supermarket-style stores.
It was also looking to expand its retail operations in Brisbane. The aim was to trim operational costs, increase profits, build a stronger structure and maintain fewer but larger locations, he said.
The company's head office has also closed, with staff relocating to its Boondall store.
"We want to get into a good financial position and then move forward," Green said.