Troubled Melbourne-based whitegoods retailer, Clive Peeters, has been placed into administration.
The decision came after talks with bankers yesterday after the company had asked for its shares to be suspended.
Media reports said the company owed around $35-$38 million to banks, led by the NAB and around $100 million to trade creditors.
The shares last traded at 15c on Tuesday.
They had fallen to 10.5c a week ago in the wake of a downgrade in sales and earnings after a fall in retail activity in the past couple of months.
Some reports claimed the company was a victim of the downturn in the retail sector, but a $20 million dollar fraud last year had left the company with badly weakened finances and unable to withstand the impact of the slowdown.
The fraud was by an employee and all but forced the company into administration last year.
But it cut staff, stores and slashed stock levels with the support of its banks and hung on.
Earlier this month Clive Peeters said its operating loss for the three months to March 31 was expected to be $4.5 million compared with a loss of $600,000 for the same period last year.
Last year a Clive Peeters employee was sacked for taking around $20 million from the company and using the money to fund a property buying spree.
Colin Nicol, Keith Crawford and Matthew Caddy of McGrathNicol have been appointed voluntary administrators of the retailer and its various entities.
The administrators said they were conducting an urgent appraisal of the company’s affairs to investigate the circumstances leading to their appointment and to determine whether the underlying business can be preserved.
"We are mindful that many shareholders will be affected by the appointment of voluntary administrators to Clive Peeters, including employees, suppliers and other creditors, customers, lessors and shareholders," Mr Nicol said in a statement (http://imagesignal.comsec.com.au/asxdata/20100519/pdf/01065124.pdf).
"It is hoped that the business can be stabilised and can continue to trade in one form or another beyond this administration."
A meeting of creditors is due to be held by May 28, tomorrow week.
The company employs about 1300 staff in 44 stores across Australia.
Six interest-rate rises and the absence of any impact from the federal government’s stimulus spending last year have impacted retailing, with several major chains revealing slowing sales growth in the March quarter and beyond over the past three weeks.
Media reports Thursday said the company had been looking to raise new capital with a share issue to two unnamed parties fell apart. Accountants KPMG had been advising Peeters on a restructuring, which included raising money through that share issue.
It now looks as though the banks, led by the NAB, will move to appoint their own administrators as soon as possible.
There were also reports the company and its administrators will look to use the KPMG restructuring plan to trim costs and try and trade its way out of trouble.
