BREAKING NEWS:Electrolux, Ecovacs & Dyson Set To Get Nothing After Godfreys Collapse Debt $45M

Creditors of collapsed retailer appliance retailer who are owed over $45 million are set to get nothing, with employees only going to get $0.73 cents if the business is placed into administration.

But if creditors vote for a Deed of Company Arrangement which administrator PWC is pushing for, then the former employees owed a combined $10 million are likely to receive 100% of their entitlements.

According to PWC Company had losses of $22.3 million during the last seven months that they traded, with several leading appliance suppliers including Electrolux, Dyson and Ecovacs owed millions by the retail group that was 90 years old and had 140 stores when it was placed into administration.

The business was struggling to compete up against the likes of The Good Guys, Harvey Norman and JB Hi-Fi.

The administrators report to creditors claimed that 26 groups expressed interest in buying Godfreys however none of the six non-binding offers were deemed suitable.

In a report to creditors filed with the corporate regulator, administrators at PwC said 26 groups had expressed interest in buying Godfreys and been allowed entry into a data room. However, none of the six non-binding offers were deemed suitable.

The report claimed that Godfreys had succumbed to fierce price competition, souring consumer sentiment, rising costs, inadequate financing when it tried to restructure, and a flawed strategy of trying to buy out franchise operators.

It was also reported that the retailer suffered from a significant drop in revenue, a failed attempt to acquire franchised stores, which “magnified their losses.”

The business acquired 36 franchise stores in the past three-and-a-half years at a total combined cost of $27 million.

The business operated 141 stores, with another 28 outlets run by franchisees.

The AFR reports that Adelaide’s Johnston family, the company’s main shareholder, attempted to keep the business running after some difficult years. Losses worsened to $44.3 million in 2023, according to the administrators.
According to PWC the retailer “had been under sales and profit pressure since 2017”.

The administrator’s opinion was that “supply and price competition across the retail sector and a general downturn in consumer sentiment due to rising inflation and finance costs, causing reduced sales revenue for the group.” There were also “inflationary factors causing greater costs to acquire stock and operate the business.”

Unsecured creditors including vacuum cleaner manufacturers Bissell, Dyson Electrolux and Ecovacs, along with a multitude of landlords are owed a $45 million with several brands slashing their marketing dollars at other retailers in an effort to rein in costs.

ChannelNews understands that some of the exposed brands, don’t have insurance.

The Australian Taxation Office is owed $883,000. There are 559 unsecured creditors overall.

PwC, in its report, recommended creditors vote for a deal with a secured lender, 1918 Finance, and have cautioned against a liquidation of the company’s assets.

1918 Finance and other lenders owed money are associated with the Johnston family.

The administrators concluded that it did not appear that Godfreys had traded insolvent.

The administrators also said they would set up a “warranty fund” which would run for the six months – until November 24 – to pay refunds to customers if any of the vacuum cleaners they had bought were faulty.

Almost all the 635 employees who were with the group in late January had been made redundant by May 31. PwC said a “limited number” would be retained until June 30 to “assist with run-off tasks”.