Creditors’ claims against Whitcoulls and other REDgroup companies have been frozen for an extended period after administrators claimed a longer moratorium is needed to prepare the business for sale. Administrators have six months, until September 2011, to put a repayment scheme to unpaid creditors.
REDgroup, which includes the Whitcoulls, Borders and Bennetts franchises is in financial difficulty. Sydney insolvency specialist, Ferrier Hodgson, has been appointed administrator. Companies Act rules give them control of the group while creditors claims are frozen. Generally, creditors get to vote within one month on any proposal to sort out the difficulty: common options are to make part payment of debts or to put the company into liquidation. The creditors’ vote can be delayed, with court approval.
Ferrier Hodgson said the REDgroup administration is particularly complicated. Company operations are spread across New Zealand, Australia and Singapore. There are 96 different retail sites in New Zealand. Thirteen of the stores are in Christchurch and seven of these are affected by the February earthquake.
Present plans are to sell the entire business as a going concern. Creditors can then vote on a distribution of the proceeds. Any sale will require an extended period to advertise the business and negotiate with interested parties.
In Australia, the court granted REDgroup administrators a moratorium extension to September in respect of the Australian arm of the business. The High Court in New Zealand granted a similar extension for New Zealand. Ferrier Hodgson have until September 2011 to put a proposal to unpaid creditors.
re WGL Retail – High Court (16.03.11)
04.11.002