Seafolly’s CEO, Brendan Santamaria, joined in May 2020. Administrators were appointed to the company shortly afterwards in the face of COVID-19 lockdowns.
The business had been facing a number of headwinds in addition to COVID-19.
- Onerous supplier and leasing obligations locally and globally.
- The difficulties also being experienced to that point by the wider retail industry.
- Seafolly is a seasonal business. The summer of bushfires had taken a toll on sales.
- Seafolly’s delivery partner, Toll, suffered a series of ransomware attacks, impacting on deliveries.
All these pressures and the uncertainties of COVID-19, combined with only limited available cash at appointment, informed the decision not to extend the convening period for the second meeting of creditors.
The administrators ran their strategies in parallel, with the decision to continue to trade, steps to restructure the business and minimise future overheads, and the start a sale process immediately on appointment. Significant media coverage of the appointment was used to promote that sale process, with information initially provided to those expressing interest without a non-disclosure agreement, before the preferred bidders were narrowed. Though short, the sale process, leveraging a recognised and quality brand, generated a lot of interest.
The timing for concluding the administration was also critical, Seafolly needing to be ready to take advantage of the Australian summer trading period. Despite the limited cash available, the administrators also needed to order stock for that season.
Ambitiously, Seafolly also purchased the Jets business, a rival swimwear company that had similarly entered administration at around the same time.
Financier Longreach Credit Investors was subsequently able look to the clean balance sheet, and take comfort from the high level of interest that had been generated by the administration process, when it provided funding to Seafolly after the administration.
The Seafolly administration is one of the clear success stories of restructuring in the midst of COVID-19.
Today’s panellists were Brendan Santamaria (CEO, Seafolly), Scott Langdon (KordaMentha) and Claudia Ruygrok (Longreach Credit Investors).