There's Life After The Wind-up
Sunday March 17, 1996
"IT'S terrific", says Australia's most famous liquidator, Ian Ferrier, of what promises to be the liquidation of liquidators.
Mr Ferrier, liquidator to the famous including Laurie Connell, Warwick Fairfax and Alan Bond, has just presided over what is the ultimate liquidation sale: the $85 million deal giving Angus & Coote and prominent New Zealand chain Pascoes the collapsed Prouds, Edments and Goldmark stores which were all owned by Universal Retailers Group.
It is a 90s relaxed and comfortable liquidation, if you can even call it that. The largest voluntary administration since the liquidation laws were changed 18 months ago, it happened over just three months, beginning four days before Christmas, without the loss of a single job or the closure of any shop.
Under the carve-up, Angus & Coote gets Goldmark and most of Edments and becomes the largest jeweller, with annual sales of about $300 million, while Pascoes gets the rest of Edments and the 93-year-old Prouds.
In the deal, the new owners had to guarantee that none of the affected 1700 shop assistants would lose their jobs, or that any of the 200 shops would close.
The job guarantee "wasn't just a moral issue," Mr Ferrier said. "There were also financial consequences."
The financial consequences were lump sum redundancy payments that wouldn't go to creditors. Keeping the business going with lenders paid off, on the other hand, meant salaries could be paid. Logical maybe, but a breakthrough in Australian receivership thinking. And a guarantee that few retailers would be prepared at the moment to give their own staff.
In the recent bad old days, all that was left of a corporation was a carcass dragged through the courts picked at by lawyers and accountants.
Now we have the "best system in the world" said Mr Ferrier, who is looking forward to quick-fixing businesses, which is "short, sharp and quick," rather than winding them up.
His hardest liquidation was Laurie Connell's Rothwells because no-one would, or could, believe it was a charade.
"After two days it was obvious it was a sham. The local service station had better book-keeping."
Ferrier Hodgson had up to 30 people working on the Prouds chain rescue, including its merchant bank partner, Hill Young.
"Some of us worked around the clock on a couple of occasions," he said, admitting: "I don't do that - it's for the young guys."
But he does live and breathe the business for a while.
"You get quite close. And you learn from others' mistakes."
Not that he is tempted to go into a business himself because he likes the intense, short-term challenges - such as, in the Prouds case, of convincing landlords to cut rents, rejigging advertising, cutting business costs by $2 million a year without retrenchments and changing stocks. Then moving on to fix the next business, insisting: "We don't go looking for them."
Mr Ferrier said the sale had "come down the wire" between the Angus & Coote/Pascoes consortium and a large Australian retailer. The $85 million price tag allowed for a $12 million payment to creditors and about $60 million paid by the consortium.
The Prouds, Edments and Goldmarks jewellery chain came unstuck because of disappointing sales and overly ambitious expansion which ran up a $100 million debt.
Mr Ferrier says he'll be watching Angus & Coote's share price, but he won't be buying any shares. You have to move on.