Strathfield Group creditors have declared the embattled retailer has pulled itself out of voluntary administration through the approval of a Deed of Company Arrangement (DOCA).
The retailer went into voluntary administration in January blaming weak Christmas sales, a poor retail outlook for 2009, and a decline in working capital.
The DOCA includes a deed fund totalling $2.8 million. All employee entitlements will be paid out to staff that were made redundant or resigned because of store closures before and during the administration process. It also includes a guaranteed minimum sum of $500,000 to unsecured creditors.
The control and operations of the company have been returned to a new board and management, while $40 million of external debt has been removed from the company’s balance sheet.
According to a statement on the ASX, Strathfield will adopt and implement a new franchise model. Additional internal restructuring involving the closure of unprofitable stores is expected to save $1.2 million per month in expenditure.
In the statement, chairman, Vaz Hovanessian, said the emergence from voluntary administration had saved 300 jobs.
In February administrators revealed the company owed creditors more than $37 million in addition to facing more than $150 million in claims by Optus and Clear Communications.