NATIONAL: Trade creditors of collapsed corporatewear chain Herringbone have all but ruled out the prospect of recovering the $7.8 million they are owed, despite continued business at its retail stores and interest from 65 potential investors.
BRI Ferrier administrator Martin Green, who was voluntarily appointed by Herringbone founders John Mutton and Matthew Jensen in December, told Ragtrader a decision on the sale of the company could be announced in as little as one week's time. However no announcement had been made at the time of press.
Green claimed 65 parties, including competitor Rhodes & Beckett, had showed expressions of interest in the business after it was advertised as a going concern early last month.
Rhodes & Beckett said a confidentiality clause prevented it from discussing the reported bid.
Potential interest in the company and administrator efforts to "trade on" came as little comfort to the unsecured creditors Ragtrader spoke with following a second meeting with administrators last month. It is understood national bank St George was the only secured creditor with a total of $5.9 million owed at 22 December, 2008.
Other unsecured or partly secured creditors included woven fabrics firm Cotonificio Albini Spa ($624,600), Ninobe Suntop Co Ltd ($600,200), logistics firm Manifattura di Albiate Spa ($64,400), Testa ($56,300), Looksmart Alterations ($35,000), Eye Corp Australia ($32,052) and software developer Harvest The Best ($22,300).
According to a second report to creditors, claims totalled $13.8 million. Controversially, the report also noted a number of "preferential" payments made to various parties six months prior to the appointment of administrators. This included $743,814 to transport and logistics firm Gava.
The company in question declined to comment on the transaction or whether it was owed any additional funds.
Looksmart Alterations representative Rami Mikhael, who oversees three alteration stores in the Sydney CBD, said he was "shocked" at the collapse of Herringbone and held little hope for recovering the amount owed to the business. Mikhael confirmed accounts for at least six months to a year of alterations work had not been paid.
However, the director said he had remained loyal to the brand and would continue to provide services under the current administrators.
"I'm not confident we'll get back what we're owed - the market is tough right now. We did alterations for a number of their stores so it's a significant amount."
Mikhael would not be drawn on expressions of interest in the Herringbone business but said he "wouldn't count" on speculation in the mainstream media.
"I've heard a lot of talk but no-one's quite sure what's going on," he said. "The administrators said they were going to contact us a few weeks after the [creditor's meeting] but it's been more than a few weeks now. Who knows?"
Herringbone has 13 stores across New South Wales, Queensland, Victoria and the ACT along with distribution channels at department store David Jones and a wholesale outlet in Sydney's Surry Hills district.
Administrators claimed its collapse was due to increased retail expansion at a time of declining sales and a move to offshore manufacturing during a slump in the Australian dollar. Other causes included high debt levels, a "lack" of board of directors and "discipline", and weak accounting management.