Litigation in the mix for discount chain
A team of administrators from Deloitte led by Vaughan Strawbridge is investigating several transactions executed before its appointment, as well as looking into whether the company traded while insolvent.
The administrators, who are assessing interest from potential purchasers of the remaining Retail Adventures business, would not comment on their investigations.
"It is not unusual for an administrator to have discussions with a litigation funder," said Deloitte spokesman Simon Rushton.
"For now, there are no ongoing discussions and no identified actions being considered by any parties."
Retail Adventures has made losses totalling $114 million since Ms Cameron acquired the business out of receivership in March 2009.
The company's directors had relied on Ms Cameron's financial support to prepare the company's accounts on a "going concern" basis.
By the time administrators were appointed, the company had net liabilities of about $118 million.
The sales process will help determine whether it is worth pursuing a deed of company arrangement on behalf of creditors, or if they are better off winding up the company.
The administrators' investigations will be critical in determining whether there is legal action worth pursuing - in liquidation - on behalf of the 1700 creditors who are owed $270 million.
Ms Cameron is one of two interested parties looking to acquire the entire business.
If successful, Ms Cameron is expected to use an $80 million secured debt to help reacquire the business she paid $85 million for in 2009.
A spokesman for Ms Cameron declined to comment.
With secured creditors being owed $105 million, a sales price will have to exceed this amount before unsecured creditors - who are owed $165 million - will receive a cent.
A recommendation from the administrators is expected before the second meeting of creditors, which is due to be held by February 26.
Frequently Asked Questions about this Article…
Retail Adventures, the failed discount chain owned by Kathmandu founder Jan Cameron, is under administration. Deloitte administrators are investigating the business and assessing interest from potential buyers. Depending on the sales process and the administrators' recommendation, creditors may decide to pursue a deed of company arrangement or to wind the company up, which could lead to liquidation.
A team of Deloitte administrators led by Vaughan Strawbridge has been appointed to Retail Adventures. They are investigating several transactions executed before their appointment and are looking into whether the company traded while insolvent, as part of determining the best outcome for creditors.
Yes. The administrators confirmed they have been in discussions with litigation funder IMF about possible legal action if Retail Adventures goes into liquidation next month. Deloitte also said it is not unusual for administrators to talk with litigation funders, but for now there are no ongoing discussions or identified actions being considered by any parties.
Since Jan Cameron acquired Retail Adventures out of receivership in March 2009, the company has made losses totalling $114 million. By the time administrators were appointed, the company had net liabilities of about $118 million.
The administrators say about 1,700 creditors are owed a total of $270 million. Secured creditors are owed $105 million and unsecured creditors are owed $165 million. A sale price must exceed the secured creditors' $105 million before unsecured creditors would receive any payment.
Yes. Jan Cameron is reported as one of two interested parties looking to acquire the entire business. If successful, she is expected to use an $80 million secured debt to help reacquire the business she paid $85 million for in 2009.
The sales process will help determine whether it is worthwhile to pursue a deed of company arrangement (DOCA) on behalf of creditors or to wind up the company. The outcome of that process will be a key factor in any potential legal action and in how — or if — creditors are repaid.
A recommendation from the administrators is expected before the second meeting of creditors, which is due to be held by February 26, according to the report.
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