ChannelLife Australia - Dick Smith creditors vote for liquidation of failed company

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Dick Smith creditors vote for liquidation of failed company

Dick Smith Holdings creditors have voted to place the failed business into liquidation in a last ditch effort to recoup some of their lost money.

The second meeting of creditors, held in Sydney yesterday, saw Joseph Hayes and Jason Preston of McGrathNicol, appointed as liquidators of DSHE and its Australian subsidiaries. The New Zealand operations, DSHNZ, were placed into liquidation on July 15, with Kare Johnstone, Andrew Grenfell and Joseph Hayes all from McGrathNicol, appointed as liquidators.

Hayes and Presyon were also among the team appointed as voluntary administrators back in January, when the company was first placed into administration and receivership.

Unsecured creditors are expected to be out of pocket to the tune of more than AU$260 million.

Secured creditors National Australia Bank and HSBC will receive a proportion of the AU$140 million they are owed, with McGrathNicol noting earlier this month that there was likely to be ‘significant shortfall’. Unsecured creditors are not expected to see any return on their investments.

Dick Smith staff have been paid their outstanding employees entitlements, with the exception of AU$2.1 million  in historical underpayment, which will be paid out later this year.

Yesterday’s meeting also saw the creditors agreeing to form a committee of inspection which will consult with the liquidators about ‘matters relating to the liquidations’.

Investigations into the failure of the 50 year old company continue, with a number of former managers and directors expected to front the NSW Supreme Court in September, and the Australian Security and Investments Commission also investigating the company’s demise.

Receivers for the New Zealand operations put the estimated net loss for the company at nearly NZ$100 million in their first report. 

The report showed an estimated net loss of NZ$97.8 million before costs of realisations. That estimated loss is book value, with the real loss likely to be even higher, with full book price unlikely to be realised and costs for the selling of assets not factored in yet.

That loss means even secured creditors are unlikely to receive full repayment, with an estimated shortfall of NZ$75 million for priority and secured creditors, before costs of realisation. 

Included among the secured creditors are Apple Sales NZ, Acer, Hewlett Packard NZ,  Spark, Toshiba and Vodafone, along with distributors Ingram Micro and Synnex.

Meanwhile, unsecured creditors are owed a further $22.8 million, which includes NZ$11.2 million to its Australian parent company.

 

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