SINGAPORE - Jones the Grocer's (JTG) Singapore arm has accumulated almost S$20 million in total liabilities, but creditors are likely to recover only a fraction of sale proceeds even if a buyer for the business is found.
The Dempsey Hill and Mandarin Gallery outlets of the Australian gourmet grocer are now up for sale after Singapore-registered Jones The Grocer International Pte Ltd was found to be insolvent and placed under judicial management on March 16.
Its parent company in Australia went into administration last December due to disputes between its former chief executive John Manos and majority shareholder L Capital Asia, the private equity investment arm of LVMH Moet Hennessy Louis Vuitton.
The total unadjudicated figure of close to S$20 million was released in a proposal handed out at a creditors meeting on Friday, inside sources said. This sum includes payments to preferential creditors such as L Capital and tax authorities, and judicial management and legal fees.
It also comprises liabilities owed to unsecured non-preferential creditors, such as third-party creditors and related-party creditors.
As part of the proposal, "some preferential creditors have agreed to share part of the sale proceeds with the unsecured creditors despite their preferential position in terms of distribution", JTG's judicial manager PricewaterhouseCoopers (PwC) said in a statement on Friday night.
BT understands the proposed figure to be paid to creditors is around 15 per cent of sale proceeds. JTG's holding company also agreed to "subordinate its debts to be ranked after the third-party unsecured creditors", PwC said.
According to sources, over 80 attendees were believed to be present at the creditors meeting, where a majority voted for a sale on the proposed terms instead of liquidation.
"This is very encouraging and gives confidence to the potential buyers of the business, as they can expect to continue working with the existing suppliers and service providers without much interruption after buying over the business," PwC added.
After PwC stepped in as interim judicial manager (IJM) of JTG last Nov 28, cost-cutting measures were implemented to bring the business of the company to a sustainable level, but JTG "has no ability to repay its current debts in full", PwC had earlier said.
One creditor - a beverage importer who did not want to be named as it is still a supplier to JTG - said that JTG had defaulted on payments as early as a year ago. But it resumed payment for further orders when the IJM took over last November and has been paying its monthly bills on time since.
On why it did not suspect anything amiss when the payments stopped, the importer said it had not expected that a business backed by such a large company would go bust.
"It's a bit surprising because Jones is so popular and always had a good reputation. It's unfortunate, but mismanagement happens in every organisation - especially when people buy over a business not knowing what to do with it. Just buying in is not good enough," he said.
Another creditor added that he would have preferred another option instead of what was proposed: "I wouldn't mind being owed for a while longer if there was a possibility of getting the full sum back. But this is better than nothing."
This article was first published on April 18, 2015. Get The Business Times for more stories.