Administrators appointed to Retail Adventures are investigating whether the failed discount retailer - which is being sold back to Kathmandu founder Jan Cameron this week - was insolvent more than a year before its collapse.
A meeting of the company's creditors committee was told last month that the administrators, led by Deloitte's Vaughan Strawbridge, are investigating "whether or not the company was insolvent" at the time charges over the company's assets were granted to Ms Cameron in July 2011. The company went into administration in October 2012.
The administrators are also investigating two payments to "related creditors" the month Retail Adventures collapsed, according to documents lodged with the Australian Securities and Investments Commission.
"The administrators' investigations continue, particularly in relation to recoveries that could be available in respect of preference payments that may have been made," the report said. The administrators' investigations would be critical in determining whether there is legal action worth pursuing - in liquidation - on behalf of 1700 creditors owed $270 million.
Ms Cameron is expected to offer a deed of company arrangement as an alternative to liquidation.
She bought the Retail Adventures business out of receivership for $80 million in 2009, and has secured loans totalling $77 million from funding she provided as the business lost $110 million in the three years she ran it. She is using part of her $77 million secured debt to acquire the business back from the administrators for $59 million. Unsecured creditors, owed $165 million, stand to receive nothing from the sale.
Another company owned by Ms Cameron, DSG has run the business on behalf of the administrators. It will now own and run the restructured operation.
Administrators have said there might be grounds to reduce Ms Cameron's secured debt from $77 million to $27 million, in which case the balance of what DSG owes on the transaction would be paid in cash.