Fashion brand Jeanswest has been saved from the executioner's axe, with the company's former owners buying the business back following the closure of 37 stores.
Administrators from KPMG announced on Tuesday morning a sale contract was signed on Monday with Harbour Guidance Pty Ltd, the Australian subsidiary of Hong Kong-based company Harbour Guide Pty Ltd, owned by Mr Chun Fan Yeung.
Fashion chain Jeanswest has been bought out of administration by its former owner.Credit:Chris Lane
Mr Yeung's family investment vehicle, Howsea Ltd, was the former parent company of Jeanswest, having bought the company from its previous owner Glorious Sun Enterprises in 2017 in a $41 million deal.
Mr Yeung was also a former director of Jeanswest prior to its collapse.
The sale will be completed in mid-March and will include 106 Jeanswest stores. Thirty-seven unprofitable stores were closed earlier this year and 260 jobs lost as part of a restructure to make the company more appealing to buyers.
The purchase price was not disclosed. George Yeung, the managing director of Harbour Guidance, said the company was committed to the Jeanswest brand.
"The acquisition of Jeanswest business will present an opportunity to rejuvenate this iconic brand well known to the Australian community," he said.
"We are committed to continue servicing Australian communities and grow the Jeanswest brand organically through an omnichannel service offering," Mr Yeung said.
Administrator James Stewart said it was relatively uncommon for related parties or former owners to buy businesses out of administration, but said it was a good thing for the company.
"Often the owner of the business doesn't have the financial capability to buy it back, so we're fortunate in this situation that parties related to the owner of the business, do have the ability to take it back," he said.
"And that's a positive thing for the business because they know the business. They believe in where the business can go, but it needed to be right-sized, which we did as part of the restructuring process.
Final confirmation of the deal is subject to Jeanswest's landlords agreeing the newly negotiated lease terms with Harbour Guidance. The company had been negotiating discounted rents with landlords in the months leading up to its collapse, but it was not enough to save the business from falling into administration.
Mr Stewart says he expects landlords will be forthcoming in agreeing to the new lease agreements, noting the "bar is not very high".
Jeanswest is one of the many retail collapses which have plagued the first two months of 2020, with fellow fashion merchants Colette and Bardot also calling in administrators, who are also seeking buyers for the well-known brands.
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