Sneakerboy sale likely but unsecured creditors won’t see much of their money that is owed by the collapsed luxury sneaker business

Administrators of the luxury shoe retailer that collapsed with $17m in debts have revealed they are finalising sales terms with a buyer.

Administrators are yet to reveal the sale price of failed luxury sneaker retailer Sneakerboy. Picture: Peter Bennetts

The administrators of shoe retailer Sneakerboy are finalising terms with a buyer who has lobbed an offer for the failed shoe chain, but the sale price will unlikely cover all debts of creditors.

Sneakerboy failed two months ago owing more than $17m and more than $500,000 in superannuation and leave to employees.

Administrator had previously reported that they believed that while the Covid-19 pandemic had contributed to the financial difficulties of the sneaker chain, the company became insolvent due to “poor strategic management”.

Sneakerboy might have been trading while insolvent for more than a year before its collapse, the administrators said in an earlier report into the company’s affairs.

Stephen Dixon, of Hamilton Murphy Advisory, has told creditors in a new report that the sale process to date has seen 40 expressions of interest to buy part or all of Sneakerboy. Those were cut to four indicative non-binding offers in July.

However, only one bidder had made it to the final stages of the proposed sale of the Sneakerboy business and Mr Dixon has withheld the sale price as those final discussions remain confidential.

Any hopes that creditors might see some or all of their money, however, have faded with Mr Dixon telling investors that the likely sale price would not cover all outstanding debts.

“The purchase price for the Sneakerboy business and assets has been withheld due to confidentiality clauses contained in the draft sale agreement,” Mr Dixon wrote in his report.

“While the purchase price and the anticipated distribution of funds received from the sale has been withheld due to confidentiality clauses in the draft sale agreement, I confirm that the purchase price will not be sufficient to discharge the quantum of the secured creditors’ debts.

From 40 prospective buyers, one unnamed buyer has been chosen to precede to the next stage of negotiations.

“The secured creditors are therefore entitled to prove in the administration of the company for the balance of their debts that are not discharged from the proceeds from the sale.

“Accordingly, there will be insufficient funds from the sale of the Sneakerboy business and assets to enable a distribution to the unsecured creditors of the company,” the report reads.

In July luxury shoe retailer Sneakerboy was placed in voluntary administration following weeks where there was a series of attempts to wind up companies that made up the group.

In June finance firm Banjo Loans lodged winding up orders against two companies in the group – Sneakerboy Retail and Luxury Retail Group – both run by Melbourne-based Nelson Mair and Theo Poulakis.

Mr Mair and Mr Poulakis founded menswear business Rhodes & Beckett, which went into voluntary administration in 2017, after which the business was restructured and sold.

By the time of Sneakerboy’s actual collapse in July the number of winding up applications lodged against companies in the group stood at more than 10 over the past three years, with Luxury Retail Group also facing a number of legal actions over the past year or so, including a $1.2m claim from the Australian Taxation Office for unpaid superannuation and taxes, and a $148,000 claim from Adidas, which sought to have the group wound up early last year.

Sneakerboy closed its Brisbane store in early April, leaving it with three stores in Victoria, at Southwharf DFO, Chadstone Shopping Centre and a flagship store on Little Bourke St, as well as a store on George St, Sydney.

The company – which sells high-end footwear such as Alexander McQueen sneakers, which sell for more than $800, and Moncler snow boots which go for $1300 – launched a surprise online warehouse sale in June, offering discounts of more than 70 per cent on some items, and currently has an online-only sale offering steep discounts.

In mid-April, Sneakerboy’s Queensland landlord, AMP Capital Shopping Centres, filed an application to wind up one of the group’s companies claiming it had failed to pay rent for more than a year. The company had failed to comply with a demand for payment of $292,172.94 for the lease of a shop in the Pacific Fair Shopping Centre at Broadbeach.