Ailing Retail Store Calls in Deloitte to Wind Up Sale

Lucas Gilmore, “Big 4″ observer
March 30, 2011 /

Deloitte administrators are now seeking buyers for the failed fashion retail store in Colorado as it declared insolvency after creditors scrapped in a meeting the proposal asking support for the ailing business.

Colorado Group, which continues to sustain its debts, is now placed in receivership, covering its 434 branches in Australia and New Zealand. The retail store’s total debt is estimated to perch at $400 million.

Several other retailers have previously gone bust in recent months like Henley’s Clothing and British retail store, All Saints, owing to tough trading conditions.

Confirmed parties are said to have expressed proposals to buy the retail store, but no serious interest has been seen yet.

The 18 lending syndicates of Colorado Group, that are owed $400 million, have appointed Ferrier Hodgson as receivers according to its partner James Stewart.

The receiver assured all employees of their due benefits amounting to roughly $7 million. Unsecured creditors are likewise owed about $27 million.

Stewart was quoted by the Sydney Morning Herald as saying the failure of the retail store to continue trading has been largely aggravated by the group’ declining performance, not least of its brand, though he adds the other brands have been faring well aided by conducive market condition.

Some products of the retail store include JAG, Diana Ferrari, Colorado, Mathers and Williams, which have been performing well.

Colorado Group’s earnings before interest taxes, depreciation and amortisation (EBITDA) was previosuly cut down from $53.9 million to $18.6 million by the board, indicating the retail store was already in bad shape for trading.

Over the last couple of months and espeically in December, Colorado Group has trekked a rocky road amid Australia’s poor trading condition, it said in a press statement. It said the board had no other option but to call in administrators, which Deloitte heeded.

Deloitte said in a statement that at the meeting with creditors which will happen in eight business days, receivers and managers of Colorado Group will give updates with regards to the sale of the business and the flow of trading of the retail store.

 

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