By Claire Reilly
Before Retravision Southern entered into voluntary administration in May 2012, the retailer was hit by record low sales, low purchasing and a significant drop in payments by stores, as well as reduced credit limits by suppliers, and not even an offer by third-party investors was enough to save the company.
Current.com.au has obtained documents issued to Retravision Southern creditors by administrators Korda Mentha, outlining the timeline of events that led to the collapse of the company as well as the current status of its affairs, as administrators attempt to reconcile accounts and distribute finances to creditors.
According to administrators, Retravision was adversely affected by an increase in short payments by member stores, cash flow and operational issues and an overall decline in sales in the lead up to its collapse.
“Management confirmed there had been a general decline in sales over the past few years as a result of poor air conditioning seasons, price deflation on audio visual products and general economic conditions and consumer confidence,” the administrators wrote. “This culminated in April 2012 sales being a near record low of $18 million.”
In addition, in the 12 months leading up to the appointment of administrators, the level of short payments by member stores not paying their account in full increased by 80 per cent from approximately $2.5 million to $4.5 million. Due to changes in financing arrangements made by the Commonwealth Bank (to its “receivables finance facility agreement”), Retravision Southern only had access to $7.5 million of the $15 million that should have been available.
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In April, the company board was advised that short payments from member stores amounted to $6.5 million and that cash flow for the payment of suppliers fell $3 million short of budget.
On 17 May, as exclusively reported on Current.com.au, the chairman of the Retravision Southern board, Ian Ray, met with staff to guarantee their entitlements, resulting in media speculation that the company was in financial trouble.
On the same day, administrators have confirmed that “a board member was contacted by a potential investor interested in discussing the possibility of an investment of considerable funds into RVS”.
The day after these discussions (18 May), 18 members of Retravision Southern each pledged $30,000 in investment bailout funds to ensure the continuing viability of the company. However, just two days later the board was advised that “the potential investor was unable to proceed with the investment” with Retravision Southern in its “existing form”.
The following day, 21 May 2012, Retravision Southern entered into voluntary administration.