BEN EATON AIMING FOR STARLEATON DOCA

Ben Eaton, managing director of stricken wide-format supplies business Starleaton, is aiming to pull the business out of the grave, with a proposal for a Deed of Company Arrangement.

Administrators are recommending creditors accept the proposal over the alternative, which is liquidation of what was a $20m a year business. Creditors will vote on the proposal tomorrow. The biggest creditors are related parties.

The administrators say that liquidation would mean zero cents in the dollar for unsecured creditors and only three to 14 cents for secured creditors, while the DOCA offers between zero and three cents for unsecured creditors, and higher payments for secured creditors, possibly repaid in full over time.

The proposal offers cold comfort to those print businesses that handed over large deposits, or payment in full, in the weeks and months before Starleaton collapsed, for equipment that never arrived. Similarly its former suppliers will see little return on the sums owed to them. The administrators say that in the event of liquidation any successful litigation against the company for trading whilst insolvent will be expensive, and will still not see any funds repaid.

Employees would be paid in full under the DOCA, including super owed to them, a total of $1.3m, to be paid over the next 24 months, with Ben Eaton guaranteeing extra payments into the DOCA if necessary ensure this happens, and to ensure that unsecured creditors get at least one cent in the dollar.

Under Eaton’s proposal Starleaton would close down its warehouses in Melbourne, Brisbane and Perth, operating solely from its Sydney base, would reduce its staff from the 28 it has to just six, and it would exit hardware and focus only on consumables.

Security for the DOCA would be provided by company founders, Peter & Leanne Eaton, and Starleaton Pty Ltd (which is not in administration), and SDS Distributions Pty Ltd.

Under Ben Eaton’s plan some $800,000 would be allocated from the DOCA to run the company in its slimmed-down form for the next 24 months.

Assets under the DOCA are estimated to be $2m-$2.2m and liabilities are $6.8m-$7.1m. In liquidation, the assets are $1.7m-$2.4m and the liabilities are $14.8m to $22m.

Since the company went into liquidation many of the companies Starleaton represented, and owed significant sums to, have signed with new suppliers. Canon signed with Smartech, Coldenhove and Klieverik are now with Ball & Doggett, while former senior execs John Buitenkamp and Dale Hawkins are now working directly with Klieverik and Zund respectively.

Under the DOCA, stock purchases by Starleaton will be COD, with sales a blend of cash in advance, seven day terms, and 30 day end of month sales.