The sale of collapsed fashion brands Marcs and David Lawrence is being hampered by owner and major creditor Malcolm Webster’s security over assets, including the chains’ stock holdings, according to potential buyers.
Administrator Rodgers Reidy confirmed Mr Webster, an experienced retailer who co-founded UK fashion chain Jigsaw, had a “general security” over the assets of the two companies, M. Webster Holdings and Webster Asset which operate the Marcs and David Lawrence chains in Australia and New Zealand, employing more than 1100 workers.
Marcs and David Lawrence fell into administration in February under the weight of debts totalling more than $30 million, including $12 million owed to Mr Webster.
Geoffrey Reidy, director of Rodgers Reidy, would not go as far as saying the security arrangement was making the sale difficult but he said it was “certainly a relevant fact”.
“Malcolm is in effect the bank in this matter,” Mr Reidy said.
One potential buyer said Mr Webster’s security over the brands’ stock was a significant, complicating factor.
“No one can do a deal without him [Malcolm Webster] because he has a security over the inventory,” one retail insider said.
“You could buy the operating companies but he could take all his inventory out. The legal structure affords the current owner an undue level of protection in my opinion.”
A number of parties have already run the ruler over the brand with analysts suggesting the Marcs operation has the best prospect of survival however Rodgers Reidy has already announced the shut-down of the brands’ 10 New Zealand stores.
Rodgers Reidy claims a “handful” of parties are currently in talks with it over the brands however Mr Reidy said it was not at a point where it could present offers to the secured creditor, Mr Webster.
He could not say how quickly these talks will progress. “I’d like to be able to give staff some certainty today but we are in uncertain territory, I’m hopeful we will be able to give them more certainty next week,” Mr Reidy said.
Retail analysts aren’t optimistic a buyer will emerge for both brands as the Australian apparel sector battles the twin pressures of flat wages growth and increasing competition from the global apparel heavyweights such as Zara, H&M and Uniqlo.
A rash of retail collapses, including Payless Shoes, Pumpkin Patch and Herringbone since December threatens to push more than 4000 workers onto the unemployment line and analysts warn there is more pain to come as traders battle to balance rising utility bills with flat or declining sales growth.
More than 40 workers will lose their jobs when the New Zealand Marcs and David Lawrence stores shut down in the next few months after a firesale of the remaining stock.
The brands have been trading in New Zealand for more than a decade and Rodgers Reidy said stock would be immediately marked down.
“While the New Zealand stores of Marcs and David Lawrence are closing permanently we are dealing with interested parties in respect to the sale of the Australian business and we are continuing to trade out of the 177 Marcs and David Lawrence stores,” Rodgers Reidy’s Andrew Barnden said.
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