Monday, 11 January 2016 01:03

Creditors meeting scheduled as Dick Smith future still up in the air Featured

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The future, or lack of it, for the Dick Smith stores may become clearer later this week as administrators look at options for the group ahead of a creditors meeting scheduled for Thursday.

The troubled retail electronics group, with 393 stores across Australia and New Zealand, was placed in voluntary administration owing millions to creditors, including the two major creditors - National Australia Bank and HSBC.

A creditors meeting is scheduled for Sydney this Thursday, 14 January, and the company says a creditors meeting in New Zealand will be held at a later date.

Whether the administrators will opt to try to sell Dick Smith as a going concern, and call for expressions of interest possibly this week, remains to be seen.

According to some media reports, Ferrier Hodgson has claimed more than 30 businesses had already expressed interest in the business by last Friday.

Meantime, major creditors, shareholders, suppliers and all customers of Dick Smith wait to see what will happen next.

Dick Smith was put into receivership after failing to secure funding following poor trading results, including less than expected Christmas sales, and the weight of high debt levels. Reportedly, while the Australian retail operations of Dick Smith have revenue problems, the New Zealand arm of the company is profitable.

When Dick Smith was placed in receivership, the receivers, Ferrier Hodgson said the company would not honour outstanding gift vouchers or refund deposits paid for goods, bought at its stores, causing a firestorm of criticism from Christmas shoppers.

But, over the weekend there was some small light at the end of the tunnel for gift card buyers, with both Coles and Woolworths, according to ceretain conditions, saying they would exchange the now worthless Dick Smith cards, bought at their supermarkets, for their own gift cards.

And, over the weekend a Queensland councillor – Paul Tully of the Ipswich Council – said he had started a petition to force Dick Smith stores to honour gift cards it sold before the firm's collapse.

Meantime, major creditors, shareholders, suppliers and all customers of Dick Smith wait to see what will happen next.

Dick Smith was put into receivership after failing to secure funding following poor trading results, including less than expected Christmas sales, and the weight of high debt levels. Reportedly, while the Australian retail operations of Dick Smith have revenue problems, the New Zealand arm of the company is profitable.

McGrath Nicol was appointed as receivers and the National Australia Bank and HSBC put high profile firm Ferrier Hodgson in as voluntary administrators.

Ferrier Hodgson has assured the market it will continue to pay the Dick Smith's 3300 employees and is keeping the doors open at its Australian and New Zealand stores while it looks at a restructure of the business and possible sale as a going concern.

That’s a long way from 1968 when entrepreneur Dick Smith and his wife started the business in a small rented premises beneath a car park in the Sydney suburb of Artarmon with just A$620 in capital, initially, installing and servicing car radios – and alongside ‘Dick Smith Wholesale’, a business catering to electronics hobbyists.

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Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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