Ellis Fibre receivership heading towards breakup of company, not sale

DUNEDIN bedding manufacturer Ellis Fibre’s receivership and liquidation appears to be moving towards a breakup of the 20yearold company, as opposed to sale.

ASB bank and preferential creditors are all expected to face a shortfall in what they are owed, while there was ‘‘unlikely’’ to be any funds available for unsecured creditors.

The report does not outline the extent of debt accumulated by Ellis Fibre, nor tally up the total assets, which would offset the debt.

Its assets were listed as stock and unfinished goods, intellectual property, plant and equipment, vehicles and customer payments owed to Ellis.

The first report has been prepared by receivers KPMG, since the company’s sole director Glenn Alexander placed Ellis Fibre in receivership on February 5.

‘‘Trading performance in recent years has deteriorated, impacting cashflow and the ongoing viability of the business,’’ the receivers said.

KPMG had initiated a sales process for the business and assets, reporting some interest in early March. KPMG receiver Andrew Hawkes did not return calls yesterday.

KPMG’s report said it had completed the sale of inventory and the majority of stock was sold for about $77,500 recently.

The company’s plant and equipment and intellectual property were still under negotiation with ‘‘potential purchasers’’.

‘‘A number of offers were received for the brands, IP [intellectual property] and for the plant and equipment.

‘‘The receivers expect to complete a sale of these assets shortly,’’ the report said.

To date, KPMG said it had informed all identifiable creditors, including online sales creditors and provided claim forms to be completed.

Numerous customers claiming to have prepaid for goods online have contacted the ODT in recent months.

The ASB had a Personal Property Securities Register over its unspecified loan to Ellis Fibre, but the receivers said ‘‘we anticipate there will be a shortfall to ASB’’.

Of preferential claims by employees totalling about $58,000, the receivers estimated those claims ‘‘will be paid in full’’.

However, Inland Revenue has a preferential claim for $136,130 for overdue PAYE, GST and other deductions, but KPMG said it was ‘‘unlikely’’ that claim would be paid in full.

The outcome looks even more uncertain for unsecured creditors. ‘‘From our observations to date, we consider that it is unlikely that there will be funds available to unsecured creditors,’’ the receivers said.

KPMG said it was too early to predict when the receivership would be finalised.

While Ellis Fibre is 20 years old, the foundations of the enterprise go back almost 50 years, manufacturing bedding products from wool, feathers and down.