Harris Scarf: “Federal Government Allowing “Legalised Theft” Claims Suppliers Allegro Funds In Crosshairs
Suppliers to Harris Scarfe who lost millions in what some are claiming was a legalised theft” of money are calling for an overhaul of the Government process that allowed a South African Company to flog an asset to Allegro Funds run by a former South African accountant who within days liquidated the department store pocketing $70M along the way.
Classica Kitchen and Giftware managing director Robert Bekhazi said the collapse of Harris Scarfe would cost his Melbourne-based business more than $1 million also facing losses are Melbourne based Spectrum brands.
It’s not known whether a side deal will see any part of the pocketed $70M make its way back to Greenlit Brands who sold the retailer to Allegro Funds.
Two people being targeted by aggrieved creditors are Adrian Loader Director of Allegro Funds, and South African Director of Allegro Funds Chester Moynihan who is also Chairman of Pizza Hut.
Moynihan who lives in as multimillion dollar North Shore home in Gordon Street Seaforth is not commenting on how he and his fellow directors engineered the pocketing of $70M at the expense of several family run businesses who one share holder said “These people are pure mongrels who feed off other people’s” pain.
“With Harris Scarfe they knew exactly what they were doing and it appears that they had great pleasure doing it, why wouldn’t they were pocketing $70M for less than three weeks work and it was all legal and that is one of the crimes” they said.
Bekhazi told News Corp that he is among the many Harris Scarfe suppliers who was left both out of pocket and angry, after Allegro Funds – the private equity firm who engineered what’s been described as the “legalised theft” of cash, left in the business when it was sold , by dodgy South African Company Steinhoff International who changed their name in Australia because of the stench of corruption associated with their parent Company offloaded the business to Allegro Funds.
“All my hard work over the past 10 years has gone and it has gone with a government and a regulator not even seeming to notice.”
Allegro, an experienced buyer of distressed assets, tipped Harris Scarfe into voluntary administration on December 11, owing unsecured creditors such as suppliers and landlords between $146.1 million and $236.4 million.
“They knew exactly what they were doing because Federal and State Governments are allowing this sort of Company to operate within the law said a Melbourne based supplier who had to sack staff because of the actions of Allegro Funds.
“Directors at Companies such as Allegro Funds see their actions as a badge of honour and there will be other victims in the future if mongrels like Allegro Funds are allowed to continue to operate, I suspect that they already have other Companies that will see more suppliers become their next victim “ they said”.
Unsecured creditors last month signed off on a deal to sell the department store chain to Spotlight Group in a transaction which will net them as little as 1.3c on the dollar.
The maximum they can expect to receive is 20.5c.
Allegro emerged with a secured debt of $70 million when it bought Harris Scarfe from Greenlit Brands. That debt will be paid out in full.
Mr Bekhazi told News Corp that while the final creditors’ report had made it clear that Allegro had not done anything illegal, the administration process was fundamentally flawed if it produced such outcomes.
“We need ASIC to look at this – the administration process should not be able to be used as a profit-making exercise for some,” he said.
The nation’s insolvency rules were dramatically overhauled in 2017, allowing directors to trade while insolvent so long as they were working on a plan that may result in a better return to creditors than an immediate liquidation.
The final creditors’ report into Harris Scarfe concludes the department store chain became insolvent from the moment Allegro took control and a critical line of credit supplied by Greenlit Brands was severed.
Deloitte Restructuring Services partner Vaughan Strawbridge, who acted as the receiver representing Allegro during the administration process, said the private equity firm had taken over the secured debt as a normal part of the sale from Greenlit.
“It was not created, it was acquired via the acquisition,” he said.
Mr Strawbridge also said Allegro had tried to find a path to avoid putting the loss-making Harris Scarfe into voluntary administration and noted the business had been bought as part of a wider deal to buy Best&Less and New Zealand’s Postie.