REDGroup in Australia Fails to Reach Deal With Creditors, Will Stop Taking Stock on June 1

PublishersLunch

The bankruptcy saga of REDGroup Retail appears to be in its closing stages thanks to a number of developments over the weekend. 


Administrators Ferrier Hodgson failed to reach an agreement with creditors on a reorganization plan, laid off an additional 34 employees at REDGroup's Melbourne headquarters, and on Monday informed suppliers that the company's remaining stores in Australia would not accept stock after June 1, with any orders made on books not yet delivered should be cancelled.

In a letter to landlords and suppliers, REDGroup's administrators said they had hoped to find a way to keep the remaining 9 Borders and 61 Angus & Robertson stores in Australia open, but said that after eight weeks of negotiation, Ferrier Hodgson said they failed to secure "enough support across the board to bring the business out of voluntary administration in its current format." As a result, the administrators are "urgently seeking offers from potential buyers of all or part of the Angus & Robertson or Borders networks," with offers for individual stores on the table as well.

Though Ferrier Hodgson said there was no time frame for when the remaining Australian stores might close, sources within REDGroup told Business Day closures could begin "between one month and six weeks." The newest round of layoffs also leaves just 40 employees at the company's headquarters.

Bookseller+Publisher
Business Day 

And sent to me from Australia - source not quoted:

REDGroup collapse: few lifelines as publishers slash orders

Australia’s largest book retailer is on the verge of total collapse, with administrators likely to break up the Borders and Angus & Robertson chains to sell to other retailers. Dymocks has confirmed to Crikey today it is in discussions with administrator Ferrier Hodgson to add to its nearly 100-strong network of stores across the Asia-Pacific region. Collins Booksellers is also understood to be in discussions as another possible lifeline for REDGroup stores and staff. But Ferrier Hodgson has warned operations will close if a buyer does not emerge after failing to reach a deed of company arrangement that would have allowed it to keep trading while repaying part of its debt load. Ferrier’s inability to find a suitable buyer raises questions about the health of Australia’s book industry, which has voiced concerns that the strong Australian dollar is luring shoppers online. Creditors include a subsidiary connected with REDGroup’s private-equity owner, publishers and landlords. Don Grover, CEO of the Dymocks Group of Companies, told Crikey the company is “still interested in some of the assets”. It will talk to Ferrier Hodgson later this week. “We’ve got some opportunity for some geographic expansion so we’d like to look at where they sit,” Grover said. “But only where it fits in with our strategy.” Grover is confident his network will adapt to an age of online retail competition and e-books. “All retailers have been finding it a little tough recently,” he said. But he believes the days of large book stores are numbered. “Book stores are always challenged by how many books you can carry. The cost of inventory and the low relative margins in Australia make it very difficult to carry large stock holdings. We continue to focus on back list book selling and our stores generally speaking … can carry 35,000 titles and that tends to satisfy those customers. Our expertise is in our relationship with customers.” Collins Booksellers has previously expressed interest in REDGroup but chief Daniel Jordon declined to comment this morning to Crikey sister site Smart Company. The company has about 5% market share. and from The Bookseller: Buyers needed "urgently" for Australian chains 31.05.11 | Bookseller Staff Australian bookshop chains Borders and Angus & Robertson may have to close if buyers cannot be found, administrators have revealed. According to a statement from Ferrier and Hodgson, the firm is "urgently seeking offers from potential buyers of all or part of the Angus & Robertson or Borders networks", the Sydney Morning Herald reports. It was also announced that 34 head office employees of private equity-owned REDgroup Retail, which owns the chains, were made redundant yesterday (30th May), a move made ahead of final decisions about the stores, according to administrator John Melluish. He said that offers for individual stores would be considered. "If we are unable to find a suitable buyer, the Angus & Robertson and Borders stores will be closed," he said. No timeframe for closures has been agreed, although sources told the newspaper that it could be between one month and six weeks. After today’s move, the group’s employees will total 883 people, according to the statement. When the company went into administration REDgroup had 2,327 staff across Australia, in 116 stores, and 90 stores with 1,150 staff in New Zealand. In April, Ferrier Hodgson announced 310 permanent and 200 casual staff cuts. Last week, REDgroup sold off 57 New Zealand-based Whitcoulls and five Borders stores, which employed 900 staff. REDgroup’s number of stores has dropped from 260 in Australia and New Zealand, to 61 Angus & Robertson stores and nine Borders locations, since being placed in administration.