By Sarah Falson
ADELAIDE: Over three thousand Harris Scarfe investors yesterday abandoned litigation against the company’s six former directors, after realising the $20 million insurance policy over which they were fighting had been spent on legal fees.
“Letters have been sent to 4,500 shareholders recommending they instead accept five cents for each share they owned when trading in Harris Scarfe was abruptly halted in March 2001,” The Herald Sun reported yesterday.
“The shares were later rendered worthless when Harris Scarfe was declared insolvent with total debts of $275 million. It has subsequently been operated by new owners who have no links to its previous directors.”
The department store chain went into voluntary administration in 2001, a year later to be taken into receivership. Debts at this stage had already reached $150 million.
However, a $20 million insurance policy was discovered the same year, and shareholders, who had been receiving incorrect annual reports and accounts, inspired an investigation by The Australian Securities and Investments Commission.
Prosecutions of Harris Scarfe’s former chairman, Adam Trescowthick and chief operating officer, Daniel McLaughlin, are still pending.
The company’s former chief financial officer, Alan Hodgson, was sent to jail for six years.
The Harris Scarfe chain has been trading for 150 years, and now operates 24 stores in South Australia, Victoria and Tasmania, and 11 Allens stores in NSW and ACT.
Earlier this month the new management team wrapped-up a six-month-long re-design and refurbishment project at its West Lakes Westfield (Adelaide) store.
The new design concept, developed by Melbourne-based consultancy Retail Environment Design (RED), is hoped to re-badge Harris Scarfe stores as big-box specialty retailers, instead of traditional department stores.
According to RED design director, Robert Ovcaric, the design brief called for the incorporation of two specialty volume destinations within the one store – ‘At Home’, for homewares and ‘In Style’ for casual lifestyle apparel.
“Harris Scarfe has taken a major step towards their vision for the future of retailing. The West Lakes store sets a new standard in specialty stores,” said Ovcaric.
"It was important for the store to be modern, with a fresh ambience to provide an enjoyable shopping experience,” he said.