New Zealand’s struggling fashion retailer Meccano sits on 5 million dollars debt pile

Fashion retailer Meccano has faced financial difficulties, including expensive leases, almost since it got acquired by De Vere Investments in February 2016, a new report from the company’s administrators reveal.

Being just able to deliver three months of profits after the investment firm took over Meccano, the apparel company’s debt pile has grown exponentially, being thought to have surpassed 5.8 million dollars.

As a result, local media reports, creditors of the failed menswear retailer are likely to be more than 5 million dollars out-of-pocket after liquidators revealed the company has debts of 5.8 million dollars but assets of 490,000 dollars.

Westpac bank will receive part of the 588,000 dollars it is owed. However, 89,000 dollars owed to the company’s workers and 90,000 due for Inland Revenue will likely not be paid.

The retailer also owes unsecured creditors 5.1 million dollars, 2.5 million dollars of that in trade creditor claims, 104,000 dollars in employee entitlements and related-party payables of 2.6 million dollars.

KordaMentha liquidator Neale Jackson said there was no surplus in the administration, but it was too early to say if creditors would receive money owed.

"Unsecured creditors would only receive money if there's recoveries that we can make in the liquidation," confirmed Jackson, adding that "We would expect to be able to report to creditors on those prospects in our next report which will be filed in six months' time."

Jackson and Grant Graham were appointed liquidators on Monday. It’s worth recalling that Meccano ceased trading in February when it was placed into voluntary administration.