Where does it leave staff, stock and creditors?
Raleru Limited, parent company of Camera House, is working with liquidators, Melsom Robson, to ensure customers are being supported through the liquidation process. Camera House general manager, Charles Davey told Appliance Retailer that the office has already taken steps to minimise any customer dissatisfaction and confirmed that the store was reopened by the administrators on Monday.
Speaking to Melsom Robson partner, George Lopez, the store has reopened and staff have been re-employed on a casual basis to assist in dealing with customer issues and while sale of the business is being negotiated.
“The role of the liquidator is to realise the assets of the company with a view to providing a return to the company’s creditors. We are also required to investigate the company’s affairs with a view to discovering further assets or transactions that could improve the return to creditors,” Lopez told Appliance Retailer.
“A by-product of that investigation is the provision of a report to the Australian Securities and Investments Commission (ASIC). This report may provide details of any offences or breaches of the Corporations Act by directors which may be uncovered in the course of the investigations. I am not stating that there are breaches or offences, but that if there are, the investigations may uncover those,” he said.
Realisation of assets is expected to occur quickly while the investigations could take some months, depending on the quality of the company’s books and records and access to information, according to Lopez.
“The business has been running for many years and the onset of insolvency appears to have occurred quite rapidly, at least from the directors’ viewpoint. The good reputation, longevity and the size of the business is one that has resulted in its insolvency creating interest within the industry. The industry itself is currently undergoing some serious challenges, caused in part by low margins, the growth of digital photography and online retailing,” he noted.
Staff
As a rule employee entitlements will rank for priority ahead of ordinary unsecured creditors.
“If the company’s assets are insufficient to pay employee entitlements such as wages, holiday pay and termination payments, employees may have access to the government’s Fair Entitlements Guarantee (FEG) scheme in which their claims may be met by the government. Unpaid superannuation entitlements are not covered under the FEG scheme but will have priority equivalent to wages in claims against the company,” Lopez explained.
Stock
The stock will be sold, either as a whole if the business is sold, or in bulk to other retailers and suppliers where possible.
“Suppliers who have supplied goods and have rights to retention of title to those goods may, if they have taken steps to secure those goods under the Personal Property Securities Act (PPSA) be able to recover them, or, if the goods have been sold while under the liquidator’s control, be reimbursed for the cost of those goods.
“Suppliers who are not secured will have an unsecured claim against the company and may receive a return by way of a dividend after the costs of administration and priority and secured creditor claims have been met,” he said.
Creditors of the business
Secured creditor claims are met from the realisation of assets subject to their security. Unsecured creditor claims are met from funds available after costs of administration, secured creditor and priority creditor claims have been met.
“At this stage, it is not certain as to the extent that secured creditor claims will be met and accordingly, the position of unsecured creditors is also uncertain,” Lopez explained.