Australian department store chain Harris Scarfe has been sold to Spotlight Group, leaving unsecured creditors in the lurch.
A deed of company arrangement (DOCA) has been agreed upon by creditors which will see Harris Scarfe continue to trade under the ownership of Spotlight Group, the parent company of craft retailer Spotlight and outdoor goods chain Anaconda.
Under the DOCA all remaining employees in the business will keep their jobs and suppliers will maintain a relationship with Harris Scarfe.
Administrators BDO conducted extensive investigations into the security held by secured creditor Allegro Funds in Harris Scarfe and concluded the it was valid and enforceable.
As reported by the AFR Allegro will be paid $70 million through the DOCA but unsecured creditors will only receive between 1.3 and 20.5 cents in the dollar. These unsecured creditors are owed between $146 million and $236 million.
"The insolvency of Harris Scarfe has resulted in unsecured creditors losing money, an outcome which is obviously upsetting," says administrator BDO.
Harris Scarfe fell into administration in December 2019 despite its leading customer satisfaction rating and annual sales of $380 million.
Spotlight Group was granted exclusivity to acquire Harris Scarfe in early March after a due diligence process that saw four parties shortlisted and given access to the trading records of the business.
When Harris Scarfe fell into administration more than 450 staff were let go as 21 stores were closed nationally.
Ahead of the sale to Spotlight a further 59 staff were made redundant as part of a restructuring process.
Business News Australia
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