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Seafolly set to be saved, but process raises questions

Seafolly
Seafolly

After less than a month in administration, courting more than 15 offers, Seafolly looks set to be saved by its former owner L Catterton.

Administrators KordaMentha picked the private equity firm as the preferred bidder for Seafolly on Monday, stating it’s offer provides the best returns to “all” creditors and staff, with more than 110 employees set to keep their jobs at the 20 stores that will remain open.

“This is a terrific result after a very competitive process,” KordaMentha administrator Scott Langdon said.

“With an optimised retail, online and wholesale network, Seafolly will continue to be the iconic Australia beachwear brand that customers know and love.”

Prior to administration, Seafolly traded across 44 stores in Australia and 12 stores overseas.

L Catterton put forward a deed of company arrangement, which will be voted on at next Monday’s meeting, 3 August.

And while the administrators are praising the deal, some creditors are questioning why the business that led Seafolly to administration is the best bet to return it to glory.

An unnamed source told AFR that L Catterton had driven the business into the ground, closed many stores and made hundreds of its workers redundant, and was now buying it back “for cents on the dollar”.

“In spite of that, the administration process has been orchestrated in a way that makes it very difficult for anyone but L Catterton to acquire the business,” the source told AFR.

“We have reason to believe this process was a done deal even before the pandemic hit.”

Questions have also been raised around the speed of the administration, with Seafolly going into administration on June 29 – less than a month ago.

Other recently collapsed brands, such as Tigerlily, saw months go by before the administration process reached a satisfying conclusion.

L Catterton acquired Seafolly through a series of transactions between 2014 and 2018.

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