Administrators of failed discount retailer Cheap As Chips are seeking to recover nearly $1 million paid to former chief executive Nick Aboud just days before the company collapsed, raising fresh questions about executive payouts amid mounting losses and unpaid staff entitlements.

Aboud, the Mosman-based retail executive and former CEO of Dick Smith Electronics, received a $430,388 “success fee” and a redundancy payment of $550,000 shortly before Cheap As Chips was placed into administration on December 30, despite the business losing up to $2 million a month in the lead-up to its failure according to afr.

WLP Restructuring, the appointed administrators, say the payments may constitute an “uncommercial transaction” or an “unreasonable director-related transaction” and could now be subject to recovery action through the courts.

“Based on the information available to date, our preliminary view is that the transaction may constitute an uncommercial transaction and/or an unreasonable director-related transaction,” WLP partners Glenn Livingstone, Benjamin Ho and Nicholas Charlwood wrote in their report to creditors.

Nick aboud left seen leaving court after a previous hearing into the collapse of Dick Smith

Aboud was made redundant just six days before administrators were appointed by private equity owner Alceon. One day earlier, Cheap As Chips formally agreed to pay the success fee for Aboud’s role in securing a buyer for dozens of stores.

However, the proposed buyer, Queensland-based discount retailer Choice The Discount Store, is now negotiating a $25.5 million deal to acquire 44 stores — a transaction that reportedly now includes staff entitlements, but not supplier liabilities.

ChannelNews understands Choice initially sought only to acquire store leases and the Cheap As Chips brand.

The attempted sale comes as employees and creditors face significant losses. According to the administrators’ report, staff are owed $4.36 million, including $1.59 million in unpaid leave and superannuation and a further $1.18 million in redundancy entitlements.

One employee, listed as claimant number 590, is seeking $448,426. Administrators have not confirmed the identity of the claimant, and it remains unclear whether the claim relates to Aboud.

Unsecured creditors are owed approximately $22 million.

Financial records reviewed by administrators show Cheap As Chips posted a $11.9 million loss in the 12 months to June 30, following a $34.9 million loss the previous year. In the final months before its collapse, losses accelerated, with the business losing $1.7 million in September, $2.08 million in October and $2.5 million in November alone.

Despite the collapse, Alceon is expected to recover up to $6.15 million. The private equity firm has attributed Cheap As Chips’ failure to competitive pressure from online giants such as Amazon and Temu, arguing the retailer’s reliance on traditional catalogues left it exposed.

Alceon, which acquired Cheap As Chips in 2016, has also owned several other retail brands that later failed, including Mosaic Brands and SurfStitch. Its broader portfolio has included luxury fashion label Ginger & Smart.

Aboud’s role in the Cheap As Chips collapse follows earlier scrutiny of his tenure at Dick Smith Electronics, which failed in 2016 less than two years after being relisted at a valuation of $520 million by private equity firm Anchorage Capital Partners.

At the time, receiver Ferrier Hodgson accused Dick Smith management and the board of inflating profitability by aggressively chasing supplier rebates, leading to unsustainable inventory levels. By early 2015, Dick Smith’s stock had ballooned to $350 million, up from $170 million just two years earlier.

Ferrier Hodgson alleged profits and inventory values had been overstated. Aboud, who was CEO at the time, denied the company’s purchasing strategy was driven by rebates.

Last month, Aboud’s lawyers wrote to ChannelNews claiming its reporting on his involvement in another retail collapse had damaged his reputation.

Administrators are now considering whether the latest payouts will become the subject of another court battle.