A week after administrator KordaMentha picked Seafolly’s former owner L Catterton as it’s preferred bidder, creditors voted yesterday to approve the private equity firm’s DOCA.
KordaMentha told Inside Retailno creditors voted against the DOCA.
However, questions have been raised surrounding Seafolly’s quick voluntary administration process, and the fact that L Catterton has more than half of the voting power for the business.
According to the AFR, the Australian Securities and Investments Commission got in touch with Seafolly last week to express concerns around the speed of the administration period, which ended up being around one month, and the likely returns for creditors should L Catterton’s DOCA go through.
ASIC confirmed to Inside Retail that it had sent the correspondence, and KordaMentha said it had presented ASIC’s concerns at the creditors meeting and gave the opportunity for the vote to be delayed.
Creditors voted against delaying the meeting, and overwhelmingly supported the DOCA, said KordaMentha.
The issue stems from the way the DOCA estimates its return to unsecured creditors – placing them in three pools, each of which are not well defined and give a different amount of money back in the event of the DOCA.
Pool A will return 100 cents on the dollar, while pool B 50 cents and pool C 3 cents.
The AFR report said administrators were unable to clarify which creditors would fall into which pool before the vote would go ahead – leaving unsecured creditors in the dark as to the amount they could expect to receive following the DOCA.
“Without further information, ASIC considers that creditors may not be able to make a fully informed assessment about the impact of the proposed DOCA and how to vote,” the commission said in a letter sent to the administrators last Friday, seen by the AFR.
And since L Catterton owns more than half of the voting power in the business, unsecured creditors could have voted either way and it would have made little to no difference to the outcome.
Prior to administration Seafolly traded across 44 stores in Australia and 12 overseas, with the DOCA to mean that 20 stores will remain open and more than 110 employees will remain employed.
