Surf company divides the spoils

Administrators of collapsed surfwear retailer The Brothers Neilsen are working to maximise the value of its assets following a failed sale bid and subsequent liquidation. Administrator John Greig, a partner at Deloitte Corporate Reorganisation Group, said the assets of the company included its stock, fixtures, fittings and brand name.

"In these situations we tend to start by offering all the assets as one package, as there is clearly much better value in that approach," he said. It is understood Brothers Neilsen and its overseas arm Brothers Neilsen International owe around $3.5 million to creditors, including surfwear brands Rip Curl and Billabong, as well as smaller clothing suppliers.

The liquidation, effective June 26, followed termination by Greig - acting as deed administrator - of a Deed of Company Arrangement (DOCA), a legally binding document between the company, its creditors and the administrator.

A sale contract, signed in May this year by Brothers Neilsen directors, was to be discussed at a meeting on June 27, involving potential changes to the DOCA. However the meeting was cancelled when it was revealed funding required to complete the sale had not been finalised.

Allegedly the company had hoped a $13 million capital injection by an undisclosed WA company would help salvage its business, but the funds faltered, reportedly due to the global credit crunch.

"I became concerned that whilst these delays continued, the financial position of Brothers Neilsen would continue to deteriorate, together with the position of all those creditors who supply goods and services to the business," Greig said.

Founded in 1971 by former surf champion Paul Neilsen and his brothers Rick and Len, The Brothers Neilsen operated 10 surf shops across southeast Queensland. In 2006 the company - already struggling to adapt to the changing surfwear market - was beset by poor cash flow and mounting debts, leading to a decision to sell. 

With interest either withdrawn or at a level that was unacceptable, the sale process came to an end and the company appointed a voluntary administrator in August 2006.

Commentators attributed the Brothers Neilsen's demise to numerous factors including trading declines, bloated head office overheads and rising rental costs at key stores. As of end of business on June 27, all 10 stores were closed.
Neilsen Brothers directors Paul Neilsen and Ahmed El Safty were unavailable for comment at the time of writing.

By Belinda Smart