Staff future unclear as stores go

Shanton Fashion owes $7.79 million, which includes holiday pay for some employees.

Shanton Fashion's stores in Fraser Cove and Whakatane will be closed by the end of next month.

The move is part of the company's restructuring as it goes through voluntary administration. A total of 17 of the company's 37 outlets nationwide will close and up to 70 full-time equivalent staff out of 155 will lose their jobs.

Local managers of the Tauranga store, Fraser Cove, and Whakatane, refused to comment on the closure or provide details of any job losses.

Company administrator Bryan Williams, of BWA Insolvency, said some staff would be relocated. He was unsure how many.

"It is with a great deal of regret that the store footprint needs to reduce, but this is the first step towards the rehabilitation of a brand that has been an icon in the New Zealand marketplace for more than 30 years," said Mr Williams.

He was appointed administrator when Shanton Fashions went into voluntary administration on January 11. The company owes $7.79 million to 206 creditors, including the IRD and outstanding holiday pay owed to Shanton employees.

Negotiations on selling the business were continuing and Mr Williams expected they would conclude next Tuesday, with five possible contenders in the mix.

Two years ago the fashion chain - then Shanton Retail - was bought out of receivership. Formerly owned by Shanton Apparel, which also owned the Bed, Bath and Beyond homeware stores, Shanton Retail went into receivership in 2012. A new firm, Shanton Fashion, was incorporated in November 2012 and took over the chain.

The directors were Auckland-based Mandeep Pala, Inderjit Luthera and Vijesh Bhagwan Nangia. All are now listed as inactive.

Mr Williams said many stores were the heritage of the Shanton business before it went into receivership in 2012.

The stores were too big and therefore uneconomic.

He formally notified managers and staff on Tuesday, but notice will run from March 2. Affected staff's entitlements would be paid on the final day of employment. Two-week-notice staff will finish on March 15, and four-week-notice staff at the end of the month.

Shanton Fashion closures
*Voluntary administration (VA) is a formal insolvency process providing a legal framework that enables the potential for a company workout from difficult economic circumstances.
*As part of the VA process, Shanton Fashion will close its stores in Tauranga, Whakatane, Eastgate, Northlands, Masterton, The Base, Palmerston North, Feilding, Thames, Gisborne, Napier, Nelson, Westgate, Sylvia Park, Botany, Manukau Supa and Albany.