Australian retailer David Jones has been placed in administration, raising questions about the future of its workforce and customers.
* WHAT DOES GOING INTO VOLUNTARY ADMINISTRATION MEAN?
Voluntary administration is a temporary pause and review mechanism, and provides a struggling company with immediate breathing room.
Dr Tamara Wilkinson from Monash University Faculty of Law says McGrathNicol has taken control over the business, allowing creditors to ultimately determine if the business can be restructured and saved or if it must close down.
Hilco, the major secured creditor owed more than $200 million, has also appointed a receiver to protect its assets.
* WHAT HAPPENS NOW?
The first creditors’ meeting will be held on Tuesday, where they will vote on keeping McGrathNicol as the administrator or appointing another.
Creditors will also vote on whether to appoint a committee of inspection to oversee the administration process.
The administrator’s main job is to investigate the company’s circumstances and recommend one of three options: liquidation, deed of company arrangement, or returning to business as usual – but the third option is highly unlikely according to Dr Wilkinson.
Creditors, including Hilco, employees, gift card holders, and suppliers, will vote on the recommended option.
* WHY DID MAJOR BRANDS SCRAMBLE TO TAKE THEIR STOCK OFF THE SHELVES AFTER THE ANNOUNCEMENT?
Suppliers, such as makeup, perfume and clothing brands, have taken their stock back to minimise losses.
The stock belongs to the suppliers, not David Jones, and is considered their property.
But if the stock is left in store, and a decision is made to close down – any leftover stock could be part of the liquidation.
* IS IT LIKELY SHOPS COULD BE CLOSED, JOBS LOST?
Potentially thousands of jobs are at risk, David Jones has 6000 staff and 36 stores across the country.
Gerard Dwyer, National Secretary of the Shop, Distributive and Allied Employees’ Association (SDA), says they will work with administrators to redeploy staff made redundant.
* WILL WORKERS GET PAID?
Employees will receive protection through Australian employment law after secured creditors are paid.
This means if there is any money left after secured creditor Hilco receives the $200 million they are owed, employees will be paid their wages, superannuation, and leave entitlements.
* CAN SHOPPERS STILL USE DAVID JONES GIFT CARDS?
Yes, at the moment gift cards are still being accepted. But Dr Wilkinson says this will likely be the first thing to go, so suggested people with gift cards should use them sooner rather than later.
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