NATIONAL: Australian employees of Line 7 have not received a single cent in preferential entitlements since the company’s collapse earlier this year, despite workers abroad already securing over $250,000 in payment claims.
The New Zealand lifestyle brand was placed into receivership on June 29, after the global financial crisis and a failed restructure saw it collapse under $8 million of secured debt. Its Australian arm was wound up just four days later, with liquidators Scott Kershaw and David Winterbottom voluntarily appointed to the company.
Winterbottom and Kershaw are employed by insolvency firm KordaMentha, which is also handling the receivership of Line 7 in New Zealand. While Ragtrader confirmed $251,000 had been paid to New Zealand workers under the receivership, Australian employees are still campaigning for their entitlements.
KordaMentha Sydney said preferential claims are currently being reviewed and will be paid in full, but declined to specify a time frame. However, several Line 7 Australia employees contacted by Ragtrader said there had been multiple delays in securing remuneration.
One long-term employee, who did not wish to be named, said workers were concerned the company was trying to avoid its obligations.
“My concern at this point of time is the payment of full entitlements,” the employee said, declining to comment on how much was owed by Line 7.
“It is 13 weeks now since the company was liquidated in Australia. I got a phone call from [Line 7 owner and director] Ross Munro on the 29th of June, informing me of the collapse in New Zealand and that Australia would be shut down in the next day or two, when my position would cease immediately. I then got a call from KordaMentha on the 3rd of July – don’t come to work on Monday.”
Australian employees are also frustrated by reports Munro had registered a new company, ‘Sportfolio’, on June 8, just weeks before the collapse of Line 7.
Munro also recently acquired the Australian and New Zealand license for sportswear brand Canterbury, which has faced its own challenges since its European arm was placed into receivership in July.
Munro issued a statement at an Australian creditors meeting earlier this year, claiming he had no choice but to place the arm in liquidation. The New Zealand business had ceased production after entering receivership and was in the process of closing its New Zealand stores at the time.
“Without the continued supply of stock to the company, the company was unable to continue trading and therefore unable to pay its future debts as and when they fell due,” he said. “As a result ... there was no alternative other than to liquidate the company.”
A letter to creditors indicated KordaMentha Sydney would earn approximately $150,000 in liquidation fees. KordaMentha New Zealand is expected to issue a second receivers’ report before February 2010.