Shanton has 155 employees across 37 stores nationwide. Staff were being paid and stores traded normally while the administrator advertised the business for sale on January 30. Photo / NZME.
Shanton has 155 employees across 37 stores nationwide. Staff were being paid and stores traded normally while the administrator advertised the business for sale on January 30. Photo / NZME.
Up to 70 staff, just under half of those working for Shanton Fashions, are losing their jobs as 17 stores close under a restructuring process before the financially-troubled clothing company is sold by the voluntary administrator.
Of the 37 stores nationwide, those due to close are Eastgate, Northlands, Whakatane, Masterton,The Base, Palmerston North, Feilding, Thames, Gisborne, Napier, Nelson, Westgate, Fraser Cove, Sylvia Park, Botany, Manukau Supa and Albany.
Some 206 creditors of the women's clothing chain are owed almost $7.8 million while the company has only $3.35 million in assets. The $4.4 million shortfall was significantly above the directors' $693,000 estimate when the company went into voluntary administration on January 11.
Some staff will be relocated to other stores, although administrator Bryan Williams, of BWA Insolvency, said he was unsure at this stage how many staff will relocate.
"As with any company restructure, it is a very difficult decision, but it was necessary to close the stores. Many stores are the heritage of the Shanton business before it went into receivership in 2012. The stores are too big for the type of commercial activity Shanton should be doing and, therefore uneconomic," he said.
The 70 out of 155 staff losing their jobs are all full-time workers and some will serve out two weeks notice and others four weeks.
The sale of the business is due to be concluded next Tuesday with negotiations continuing with five contenders out of an original nine that showed interest.
Voluntary administration is a short-term measure that freezes the company's financial position while the administrator and creditors determine its future.
A watershed meeting, where creditors decide on the company's future, was postponed from February 16 until March 30 to allow the sales process to run its course.
The company made a net loss of $824,000 in the 9 months to December 31 off sales of $12 million. Debts include $1.58 million in loans from interests associated with the company's director/shareholders which the report said would require further work to confirm what's owed.
