Jeanswest administrators to close all 87 stores within six weeks

All 87 Jeanswest stores will close down in coming weeks as $20m of heavily discounted stock goes on sale. It comes as administrators work on a plan to salvage the iconic brand.

All 87 Jeanswest stores across the country will close their doors for the last time within the next six weeks, as administrators look to sell off the remaining stock and work with the company’s directors on a plan to salvage the iconic retail brand.

Creditors have gathered for the first time where they were given an update on the company’s financial position, including the company’s outstanding debts, and the directors’ plans to pitch a deed of company arrangement (DOCA) proposal.

Administrators Lindsay Bainbridge, Andrew Yeo and David Vasudevan from Pitcher Partners in Melbourne have applied for an extension to the deadline for holding a second creditors’ meeting, to enable a sell-off of remaining stock and to allow the company’s directors to complete their proposed DOCA.

It is at the second meeting where creditors will vote to approve the DOCA proposal – a payment plan that would hand back control to the company’s directors and save the brand – or appoint liquidators to wind up the company.

The Jeanswest store at Eastgardens Westfield is one of 87 stores set for closure. Picture: NewsWire / Simon Bullard

The administrators declined to provide to News Corp Australia their estimates of the company’s debts to creditors and employees, but have previously said they’d identified a significant related party debt of about $40m

They told News Corp Australia no stores had closed since their appointment on March 26, and they would commence a review of the closure timeline after Anzac Day.

“The administrators’ intended strategy and intention to have stores remain open for up to eight weeks (from April 4),” minutes of the first creditors’ meeting say.

“It was noted that these stores may close earlier than eight weeks if stock levels are depleted. The exact timeline for specific store closures will become clear as more information becomes available.

“At this stage, the directors have indicated that they and related party creditors may propose a DOCA, the terms of which will be known after the sale campaign.”

Administrators told creditors the company’s failure was down to an “unsustainable business model”, where trading shortfalls were funded by related entities for the past five years.

Harbour Guidance Pty Ltd, a subsidiary of Hong Kong’s Harbour Guide Ltd – controlled by billionaire Chun Fan Yeung – acquired Jeanswest five years ago out of administration after it previously hit financial trouble.

Administrators will close down all 87 Jeanswest stores over the coming weeks as it looks to sell off remaining stock. Picture: NewsWire / Simon Bullard

A report outlining the company’s debts and details of any DOCA proposal will be sent to creditors before the second meeting, which is likely to be held in late June.

Administrators have committed to closing down all of the chain’s bricks-and-mortar outlets in Australia, but are exploring opportunities to restructure the business as a potentially online-only retailer.

The 90 store closures over the coming weeks will result in around 600 retail workers losing their jobs.

In an update last Wednesday, administrators said more than 53,000 pairs of jeans, and 160,000 items in total, had been sold in the first week of a nationwide discounting campaign.

The sale will continue over the coming weeks as administrators look to shift more than $20m worth of stock.

Jeanswest opened its first store in Perth in 1972, and had grown to close to 150 stores before its collapse in 2020, when it employed about 1000 people.

The brand operates three stores in New Zealand, which are not part of the administration process and will continue to operate.