David Jones has entered voluntary administration and had receivers appointed, with the board handing control to administrators and receivers on the same day, ABC News reported. McGrathNicol was appointed as voluntary administrator, with Matthew Hutton, Jason Preston, Shaun Fraser and Jacinta Nielsen named as the administrators. FTI Consulting was appointed as receivers and managers, with Joanne Dunn, David McGrath and Christopher Hill named following appointment by lender Hilco.
The 188-year-old department store has roughly 6,000 employees across Australia and New Zealand, including around 650 based in Western Australia. McGrathNicol is set to run a sale process for the business, while the department store has continued to trade. Creditors are scheduled to hold their first meeting on 17 November.
Scentre Group, owner of Westfield, disclosed that David Jones had not paid rent since 30 September, with 17 of David Jones's 38 stores located within Westfield shopping centres. Vicinity Centres disclosed $2.2 million in unpaid rent owed by David Jones.
The David Jones flagship store on Hay Street in Perth carried a rent debt of $1.5 million. Shortly after the administration was announced, labels including Scanlan Theodore, Viktoria & Woods, Zimmermann, Sportscraft, Saba and Carla Zampatti pulled their stock from Eastern States locations.
Hilco Global holds the stock in David Jones stores as security for its lending. Tamara Wilkinson, a corporate law expert from Monash University's Faculty of Law, said Hilco and its appointed receivers would be weighing their options on what to do with stock in David Jones stores, noting they could profit from a fire sale or potentially do better by channelling the stock to another seller at full price.
Independent brands face potential losses after shipping stock ahead of the Christmas period. Australian beachwear and bathrobe brand K Juliet launched products across 18 David Jones stores two weeks before the administration was announced.
K Juliet founder Chloe Barry-Hang wrote on Instagram that the brand's first order from a major department store represented a large investment and was intended to supply stock through to March, adding that the company would not receive any payment. Unpaid suppliers rank as unsecured creditors and are expected to join the creditors queue behind secured lenders.
Around 6,000 employees face uncertainty about whether they will retain their jobs. Ben Harris, Western Australia secretary of the Shop, Distributive and Allied Employees' Association, told The West Australian that members are loyal to the brand and have worked at David Jones for a long time, and that the uncertainty heading into Christmas is stressful for workers who are also managing their own household finances.
Reporting: ABC News, SmartCompany, The Nightly
Written by Pick & Scroll News from the reporting and documents linked above.
