Litigation funder mulls Retail Adventures class action
RECLUSIVE businesswoman Jan Cameron could face a class action lawsuit on behalf of unsecured creditors to her failed Retail Adventures discount chain.
The litigation funder IMF is rallying support for an investigation into a string of issues around the collapse of the merchandise group, including possible insolvent trading, uncommercial transactions and unreasonable director-related transactions.
IMF has sent letters to unsecured creditors of Retail Adventures to push for a public examination of the collapsed retailer's books, the first important step to launch a lawsuit.
"What we have been pushing for, and are prepared to fund, is a proper public examination by the administrator of questions like the security, the insolvent trading and potential preference payments," the managing director of IMF, Hugh McLernon, said. "This examination should have taken place already and certainly should take place either now or after the company goes into liquidation."
Retail Adventures' administrators, Deloitte, announced they had agreed to sell the failed Retail Adventures business to DSG Holdings, a company associated with Ms Cameron, for $58.9 million.
Ms Cameron was Retail Adventures' sole shareholder and the largest secured creditor of the discount retailer that operated under the Crazy Clark's and Sam's Warehouse brands.
A Deloitte partner, Vaughan Strawbridge, said DSG's bid was the highest offer received. Of the roughly 5000 staff at the company, it looks like 4700 jobs will be retained.
But the sale could be overturned if creditors vote to send Retail Adventures into liquidation, at which point IMF could pounce.
Deloitte has begun its own investigations into contentious issues and, in a circular to creditors, said it was investigating issues around insolvent trading, uncommercial transactions and unfair loans to a company.
It will also investigate $77 million in loans made by companies linked to Ms Cameron to Retail Adventures before its collapse, and whether security backing up to $50 million of that debt could be challenged by a liquidator.
It is this $77 million in secured debt Ms Cameron is using to pay the purchase price of Retail Adventures by her DSG Holdings.
Mr McLernon said if Retail Adventures was placed in liquidation, only after a public examination could he decide if there were grounds for a lawsuit against Ms Cameron and the former directors of Retail Adventures.
"The material available, including the accounts that ASIC [the Australian Securities and Investments Commission] have required to be produced by [Retail Adventures], indicate that there is a serious need for a proper and full public examination," he said.
A spokesman for Ms Cameron would not comment.