Business as usual for Shanton, for now

The administration comes just over two years after Shanton was bought out of receivership at the end of Dec 2012. Photo / NZME.

Shanton's newly appointed voluntary administrator will discover the extent of the clothing chain's debts by the end of this week.

The administrator, Bryan Williams, said the 240 staff at 37 stores across the country would continue to get paid and that it was too early to tell if there would be redundancies.

"The directors are still of the view that the business can continue and the brand survive", said Williams, who was appointed on Sunday.

The women's clothing stores will continue to trade normally, though Williams said gift vouchers and lay-by purchases will need to be dealt with through his office.

The administration comes just over two years after Shanton was bought out of receivership at the end of December 2012.

The directors of the chain's owner, Shanton Fashions, appointed Williams after the company's credit facilities were withdrawn and demands made for repayment of the overdrawn balance.

Williams said the company had discounted its stock to meet the market and that had come at the expense of its margins.

Forsyth Barr equity analyst Chelsea Leadbetter could not comment on Shanton specifically, although pointed out that apparel sales in general have been weak and underperformed the rest of the retail sector.

First Union, which represents retail workers, did not have a collective agreement with Shanton but its general secretary Robert Reid said: "Regardless of whether they [Shanton workers] are members or not, this sort of thing is a really worrying time, particularly when it happens around this time of year."

Shanton is not the first clothing chain to hit trouble in the past 12 months and Postie Plus also called in voluntary administrators last June.

Shanton itself was in trouble in 2012 and was purchased in December of that year from receivers.

Its previous owner, Shanton Retail, eventually repaid the $600,000 owed to its employees and Inland Revenue. Receivers reached a deal with trade creditors owed $1.6 million.

Voluntary administration

• A short-term measure that freezes the company's financial position while the administrator and the creditors determine its future.

• An administrator is independent and takes full control of the company to try to work out a way to save the business.

• If this is not possible, the administrator organises the affairs of the company in a way that results in a better return to creditors than if it went straight into liquidation.

- Source: Companies Office