No Question Asked: Dick Smith Creditors Mute on Overdue Millionsby
Creditors owed at least A$390 million asked no questions
A 12-person representative committee appointed by creditors
Creditors who are owed at least A$390 million ($270 million) by failed Australian retailer Dick Smith Holdings Ltd. gathered today for the first time. Not one of them asked what went wrong.
Representatives of banks, suppliers, customers and employees left out of pocket by the corporate collapse listened in silence as Dick Smith’s administrator twice asked for questions at the meeting in central Sydney on Thursday.
Joe Hayes, a partner at administrator McGrathNicol, wrapped up the proceedings in less than an hour.
Creditors and investors had scant warning of the impending cave-in at Dick Smith. Little more than two months after trimming profit guidance, the retailer crumpled on Jan. 5 after sales promotions failed to generate enough cash to keep the business going.
Receiver Ferrier Hodgson is seeking takeover offers for the business and expressions of interest are due by Jan. 27. Even so, Hayes told the meeting it’s not certain everyone will get their dues.
“Strong offers are needed to compensate all creditors,” he said. They include 3,300 employees, two banks, 200 trade creditors and 150 landlords. It may be months before it’s clear who will be repaid, Hayes said.
Creditors at the meeting voted to appoint a 12-person committee to represent them.
Just two years ago, a private equity-led listing valued Dick Smith at A$534 million. Chief Executive Officer Nick Abboud stepped down this week, leaving secured creditors owed approximately A$140 million and unsecured creditors about A$250 million out of pocket, according to Ferrier Hodgson.
It’s too soon to say exactly what went wrong at Dick Smith, Hayes told reporters after the meeting.
McGrathNicol was privately appointed by the retailer in late December, about a fortnight before Dick Smith announced it was in administration, Hayes said. Even after bringing in McGrathNicol, Dick Smith continued to sell gift cards to customers that it now won’t honor.