Creditors of collapsed vacuum retailer Godfreys will not get back any of the $45 million owed to them, with over 400 former employees set to receive 73¢ in the dollar for their outstanding earnings.
The vacuum cleaner retail chain Godfreys has collapsed into voluntary administration.
Godfreys Group announced on Tuesday that it had made the decision to appoint PricewaterhouseCoopers (PwC) as voluntary administrators.
The voluntary administrators will see around 54 stores shut across Australia, and 193 staff workers cut.
Administrators will hold their first creditors meeting on February 9.
The retail chain was founded in 1931 by Geoffrey Cohen and became one of Australia’s biggest Vacuum retailers in Australia with 140 stores in Australia and New Zealand.
The Aussie vacuum retailer entered voluntary administration in January, 93 years after it was founded by Godfrey Cohen in 1931, with the first store opening in Melbourne’s Prahran market.
It began to suffer in an increasingly competitive appliance market, with retailers like Harvey Norman, Amazon and JB Hi-Fi, which owns The Good Guys taking the cake in customer preferences.
Australian vacuum retailer Godfreys entered voluntary administration 93 years after the business was founded. Picture: The Advertiser/ Morgan Sette.
It has also been previously pointed out that not selling the increasingly popular Dyson brand put Godfrey’s miles behind its more up-to-date competitors.
Administrators Craig Crosbie, Robert Ditrich and Daniel Walley of PricewaterhouseCoopers (PwC) Australia released their Voluntary Administrators’ report, detailing whether the company could pay its existing debts.
The report revealed that the collapsed retail giant owes its employees over $10 million.
This includes annual leave, payment in lieu of notice, long service leave and redundancy.
457 employees will receive 73¢ in the dollar for their outstanding earnings, while 25 customers are left $18,000 out of pocket.
Creditors including Ecovacs, Bissell Australia and TEK which are owed $45 million will not see any return, PwC confirmed in a statement.
“We do not anticipate that there will be a return to unsecured creditor from the Godfreys group administration given unpaid employee entitlements are significant and rank in priority for payment over ordinary unsecured creditor claims.
“Customer creditors should assess whether they want to invest time to submit a claim when no return is anticipated.”
Almost 100 Godfreys stores have closed as of the end of May, with the retailer facing sales and profit pressure since 2017.
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PwC identified customers reduced disposable income caused by higher inflation and increasing interest rates as having a negative impact on sales, as well as the inability to increase prices due to competition.
An increased cost of sales and increasing operating costs were also identified as factors in the company’s demise.
It was also highlighted that Godfreys acquired numerous franchise stores which exacerbated the decline in performance due to the increase in borrowings.
More than 50 parties, including leading Australian retailers, were consulted about rescuing the franchise, but a suitable buyer could not be identified.