Embattled specialty retailer, Strathfield, owes creditors upwards of $37 million in addition to facing more than $150m in claims by Optus and Clear Communications, the company’s voluntary administrators said.
Strathfield Group (ASX: SRA) went into voluntary administration late January, blaming its demise on weak Christmas sales, a significant decline in working capital and a poor retail outlook for 2009. The company is facing a $10.4 million loss so far in the current financial year.
The first meeting of Strathfield creditors was held in Sydney last week where voluntary administrators, Brian Silva and Andrew Cummins of BRI Ferrier, presented the financial position of the company.
According to the administrators, as at January 25 the company incurred losses of $7.6m for the last fiscal year, and is currently facing $10.4m in losses for the first seven months of 2008/09. Creditor claims include more than $18.4m owed to secured creditors, $15.8m to unsecured trade creditors and $2.8m in employee claims. A total of $37m.
Contingent creditors not valued include landlord damages claims on store closures, Optus’ potential damages claim of $43.6m and Clear Communication’s $110m claim that Strathfield’s value was misrepresented when it was acquired in December. Clear Communications is the controlling shareholder of Strathfield.
According to a statement submitted to the ASX by BRI Ferrier a week before the creditors meeting, the administrators will provide details of creditor returns over the next four to five weeks.
The administrators valued Strathfield’s book value assets at $34.6m.
There are currently 62 Strathfield stores in NSW, Qld, Victoria and SA (down from 94 in September 2008). They are made up of 17 franchisees, 35 franchisees pending and 10 company owned.
The company will continue to trade during the administration period. Store closures and redundancies are expected.
BRI Ferrier said the emphasis was on migrating the business to a franchisee model for 2009, but this strategy is still under review.
The administrators said a second meeting will decide the company’s future on March 3, when creditors will decide whether to return the company to control of the directors, accept a Deed of Company Arrangement or to put the company into liquidation.
BRI Ferrier had not replied to requests for comment at the time of publication.