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Dick Smith Electronics' Liquidation reveals grim financial state after seven years
Fri, 1st Sep 2023

In a recent development, KPMG, the firm overseeing the liquidation of Dick Smith Electronics in New Zealand, has released its sixteenth report to creditors. The report, dated August 18, 2023, provides a comprehensive update on the financial status and ongoing legal battles related to the company.

Dick Smith Electronics, once a prominent chain of electronics stores across New Zealand, went into receivership on January 4, 2016. The receivership was initiated by a syndicate of lenders under a General Security Deed dated June 22, 2015. The company was later placed into liquidation on July 15, 2016, with McGrathNicol appointed as the liquidators. Despite initial efforts to sell the company, the sale process did not yield any acceptable offers, leading to a decision to wind down the company's affairs and close its 62 retail stores by April 29, 2016.

Financial Status
As of July 4, 2023, the syndicated lenders' secured debt against the group was estimated to be NZ$245,516,110. The report also revealed that all claims made by secured creditors, other than the syndicated lenders, have been settled, totalling NZ$1,298,597. The estimated preferential claims against the company, including employee claims and Inland Revenue Department dues, stand at NZ$3,244,923. The estimated unsecured debts and liabilities are around NZ$24,904,289, which includes trade creditors, employees, landlords, customers, and suppliers.

Legal Proceedings
In 2017, legal proceedings were initiated against the directors of DSHE Holdings Limited, a parent company. Although initially unsuccessful, an appeal was partially successful. However, the executive directors have obtained special leave to appeal to the High Court of Australia, with the substantive hearing scheduled for October 9 and 10, 2023.

Future Outlook
The report indicates that it is unlikely there will be sufficient funds to enable a distribution to unsecured creditors. The estimated completion date for the receivership is June 30, 2024, contingent on the High Court of Australia's decision.

The report serves as a sobering reminder of the complexities and challenges involved in the liquidation process, leaving creditors, employees, and stakeholders in a state of uncertainty.

For further inquiries, creditors are advised to contact Elesa Frangieh-Nencioni at KPMG.

Source: Sixteenth report to creditors by KPMG, dated August 18, 2023.