Australian department store David Jones has entered voluntary administration and receivership after rent negotiations with landlord Westfield collapsed, placing its 38 locations in doubt.
The retailer’s board and private equity owner, Anchorage Capital Partners, appointed insolvency company McGrathNicol as voluntary administrator following overdue rental payments.
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Simultaneously, secured lender Hilco Capital named Christopher Hill, David McGrath, and Joanne Dunn of FTI Consulting as joint and several receivers and managers to protect its debt exposure.
According to the Australian Broadcasting Corporation (ABC), both physical shops and online operations will remain open under the receivers’ control whilst an operational review is conducted.
Employees will continue receiving regular pay during this period of trading, although unpaid historical entitlements remain subject to review.
Meanwhile, the Shop, Distributive and Allied Employees Association (SDA), which represents retail employees, confirmed that its priority centres on preserving jobs and protecting redundancy entitlements.
FTI Consulting stated that a rationalisation of the retailer’s 38 sites is anticipated in the near term.
Five loss-making stores situated within Westfield shopping centres have been earmarked for possible closure: Carousel in Perth, Hornsby and Parramatta in Sydney, Southland in Melbourne, and Woden in Canberra.
The report added that the collapse reflects escalating operational headwinds across the domestic retail landscape.
Real estate exposure is heavily concentrated across major commercial property owners.
Charter Hall Long WALE REIT (CLW), which holds a 50% interest in the Elizabeth Street flagship store in Sydney, confirmed that it is assessing developments and communicating with the administrators and receivers.
Earlier this month, David Jones failed to submit its latest financial year documentation to the Australian Securities and Investments Commission by the required date.
Retail trading will continue as FTI Consulting and McGrathNicol conduct operational assessments, confer with unions regarding store rationalisation programmes, and explore options for business recapitalisation or an outright sale.
