People queue outside the David Jones Department store ahead of the Boxing Day sales in Sydney, Australia, on Dec. 26, 2021. Wendell Teodoro/Getty Images
Australian retailer David Jones has been placed in administration, raising questions about the future for its workforce and customers.
Voluntary administration is a temporary pause and review mechanism, and provides a struggling company with immediate breathing room.
Professional service firm McGrathNicol has taken control of the business, allowing creditors to ultimately determine if it can be restructured and saved or closed down.
Hilco, the major secured creditor is owed more than $200 million (US$139 million) and has appointed a receiver to protect its assets.
What Will Happen Next?
The first creditors’ meeting will be held on Nov. 10, where they will vote on keeping McGrathNicol as the administrator or appointing another.
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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.
Creditors, including Hilco, employees, gift card holders, and suppliers, will vote on the recommendations.
Why Did Suppliers Scramble to Take Their Stock Off the Shelves?
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.
Are Job Losses on the Horizon?
Thousands of jobs are at risk. David Jones has 6,000 staff and 36 stores across the country.
Gerard Dwyer, National Secretary of the Shop, Distributive and Allied Employees’ Association (SDA), said they would work with administrators to redeploy staff made redundant.
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 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 will likely be the first thing to go, so it is suggested people with cards should use them sooner rather than later.
By Melissa Meehan in Melbourne
