David Jones collapses, store closures expected before Christmas
David Jones has been handed over to administrators and receivers for the first time in its 188 years of trading.
Staff were informed this morning that its board voted to appoint voluntary administrators from McGrathNicol. The failed retailer’s lenders then appointed FTI Consulting as receivers to the group, and they will run the business until it is restructured and put up for sale.
Administrators have been appointed after David Jones’ landlords failed to reach an agreement with its landlords.Simon SchluterStatements are expected from David Jones later this morning once it has finished briefing staff.
FTI is expected to make an update on store closures and job losses later this week. David Jones locations in Westfield Parramatta, Warringah Mall, Carindale in NSW, Indooroopilly Shopping Centre, Robina Town Centre, Sunshine Plaza in Queensland, Westfield Marion in South Australia, Westfield Doncaster, Southland, Carousel, Booragoon in Victoria, and Karrinyup Shopping Centre in Western Australia have been earmarked as highly likely to close, according to analysis by financial services firm MST Marquee.
The collapse will wipe out the investment by Anchorage Capital, and is expected to generate significant losses for unsecured creditors. This includes gift voucher holders and suppliers which are believed to be owed tens of millions of dollars.
The collapse was triggered after the department store operator’s private equity owners failed to reach a deal with major landlord Scentre Group on store closures and its rent bill.
Westfield owner Scentre Group, which operates 17 shopping centres in which the prestige department store is located, rejected a restructuring proposal put forward by David Jones. A counter-proposal by Scentre was subsequently rejected by David Jones’ board of directors on Wednesday.
Scentre Group chief executive Elliott Rusanow said David Jones had not paid rent since October and “therefore are in breach”.
“We have made a generous offer to Anchorage Capital Partners that would have facilitated the continuation of David Jones trading,” Rusanow said in a statement. “That offer has disappointingly been rejected by them.”
David Jones’ initial restructuring proposal to Scentre involved closing nine stores in its shopping centres and in February exchanging $45 million in bank guarantees held by Scentre for equity in the retailer.
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