Dick Smith Holdings Limited, ACN 166 237 841 Dick Smith Sub

15 Pages·2016·0.63 MB·English

by  Jonathan Henry

Dick Smith Holdings Limited, ACN 166 237 841
Dick Smith Sub-Holdings Pty Limited, ACN 160 162 925
DSE Holdings Pty Limited, ACN 001 456 720
Dick Smith (Wholesale) Pty Ltd, ACN 000 445 956
Dick Smith Electronics Pty Limited, ACN 000 908 716
InterTAN Australia Pty Ltd, ACN 002 511 944
Dick Smith Electronics Franchising Pty Ltd, ACN 054 295 733
Dick Smith Management Pty Ltd, ACN 001 585 735
(Receivers and Managers Appointed) (Administrators Appointed)
Dick Smith Electronics Staff Superannuation Fund Pty Limited, ACN 059 802 470
(Administrators Appointed)
(collectively referred to as “the Companies”)

I advise that Jason Preston, Jamie Harris, Matt Caddy and I were appointed Joint and Several Voluntary
Administrators of the Companies on 4 January 2016.
First statutory meeting of creditors
A first statutory meeting of creditors must be held within eight business days of my appointment. The
meeting of the Company has been convened for 14 January 2016. The statutory purpose of the first
meeting is to allow creditors to determine whether a committee of creditors should be appointed and to
appoint an alternative administrator if it is so resolved at the meeting.
Details of the meeting
The meetings will be held concurrently on Thursday, 14 January 2016 12:00pm at the Wesley Conference
Centre, 220 Pitt Street, Sydney NSW 2000. A formal Notice of Meeting is enclosed.
Creditors who intend to vote at the meeting are required to lodge a formal proof of debt. A blank proof of
debt form is enclosed. Creditors who are unable to attend the meeting and wish to be represented should
ensure that either a proxy form, power of attorney, or evidence of appointment of a company
representative is completed. A blank proxy form is enclosed.
Documents may be lodged with Link Market Services prior to the meeting or may be brought to the
meeting. Registration for the meeting will commence at 11:00am on the day of the meeting.
Creditors who are unable to attend in person may view the meeting via a webcast subject to providing
relevant proof of debt and proxy documents in advance. Please contact Link Market Services on or before
12 January 2016 should you wish view the meeting via a webcast.
Report and second meeting
All creditors will receive a detailed report from me regarding the Companies’ affairs before the second
statutory meeting of creditors must be held. A decision on the Companies’ future will be made at the
second statutory meeting.
D14-160106-DICKSMITH01-Dick Smith Circular-JPH
Declaration of Independence, Relevant Relationships and Indemnities
In accordance with Section 436DA of the Corporations Act 2001 and the Australian Restructuring, Insolvency
& Turnaround Association (“ARITA”) Code of Professional Practice, a Declaration of Independence, Relevant
Relationships and Indemnities is enclosed for your information.
This declaration discloses information regarding our independence, any prior personal or professional
relationships with the Companies or related parties and any indemnities received in relation to this
appointment.
McGrathNicol partners have acted as Voluntary Administrators for companies operating small to medium
businesses, through to very large public companies.
Remuneration
The Administrators’ remuneration can only be fixed by resolution of creditors, a resolution of a committee
of creditors or by application to the Court. Approval of our remuneration will be sought at the second
meeting of creditors.
In accordance with ARITA’s Code of Professional Practice, a Schedule of Remuneration Methods and Hourly
Rates is enclosed for your information. A Remuneration Report providing details of the remuneration sought
will be provided prior to the second meeting of creditors.
Other matters
A copy of the “Insolvency information for directors, employees, creditors and shareholders” information
sheet issued by the Australian Securities & Investments Commission is enclosed for your information.
If you require any further information, please contact Link Market Services on 1300 853 481 or by email
[email protected].

Dated: 6 January 2016

Joseph Hayes
Joint & Several Administrator

Enclosures:
Notice of Meeting
Information for attendance at meeting Declaration of Independence, Relevant Relationships and Indemnities
Schedule of Remuneration Methods and Hourly Rates
ASIC “Insolvency information for directors, employees, creditors and shareholders
Proof of Debt
Proxy

Page 2
FORM 529A
Corporations Act 2001
Subregulation 5.6.12(1)

NOTICE OF FIRST MEETING OF
CREDITORS OF COMPANY UNDER ADMINISTRATION

Dick Smith Holdings Limited, ACN 166 237 841
Dick Smith Sub-Holdings Pty Limited, ACN 160 162 925
DSE Holdings Pty Limited, ACN 001 456 720
Dick Smith (Wholesale) Pty Ltd, ACN 000 445 956
Dick Smith Electronics Pty Limited, ACN 000 908 716
InterTAN Australia Pty Ltd, ACN 002 511 944
Dick Smith Electronics Franchising Pty Ltd, ACN 054 295 733
Dick Smith Management Pty Ltd, ACN 001 585 735
(Receivers and Managers Appointed) (Administrators Appointed)
Dick Smith Electronics Staff Superannuation Fund Pty Limited, ACN 059 802 470
(Administrators Appointed)
(collectively referred to as “the Companies”)

1 On 4 January 2016 the Companies, under Section 436A, appointed Jason Preston, Jamie Harris,
Matt Caddy and Joseph Hayes of McGrathNicol as Joint & Several Voluntary Administrators.

2 Notice is now given that the first meeting of the creditors of the Companies will be held
concurrently on Thursday, 14 January 2016 12:00pm at the Wesley Conference Centre, 220 Pitt
Street, Sydney NSW 2000.

3 The purpose of the meeting is to determine:
a. whether to appoint a committee of creditors; and
b. if so, who are to be the committee's members.

4 At the meeting, creditors may also, by resolution:
a. remove the Administrators from office; and
b. appoint someone else as Administrator of the Company.

Dated: 6 January 2016

Joseph Hayes
Joint & Several Administrator
Page 3
Declaration of
Independence,
Relevant Relationships
and Indemnities
Dick Smith Holdings Limited (ACN 166 237 841);
Dick Smith Sub-Holdings Pty Limited (ACN 160 162 925);
DSE Holdings Pty Limited (ACN 001 456 720);
Dick Smith (Wholesale) Pty Ltd (ACN 000 445 956);
Dick Smith Electronics Pty Limited (ACN 000 908 716);
Dick Smith Electronics Staff Superannuation Fund Pty Limited (ACN 059 802 470);
InterTAN Australia Pty Ltd (ACN 002 511 944);
Dick Smith Electronics Franchising Pty Ltd (ACN 054 295 733);
Dick Smith Management Pty Ltd (ACN 001 585 735);
Mac 1 Pty Limited (ACN 136 849 584); and
DSE (NZ) Limited (NZ company number 37602)
(Administrators Appointed to all) (“the Companies”)

The Corporations Act 2001 and professional standards require the Practitioner/s appointed to an insolvent entity to
make a declaration as to:
1 Their independence generally;
2 Relationships, including
a. the circumstances of the appointment;
b. any relationships with the company and others within the previous 24 months;
c. any prior professional services for the company within the previous 24 months;
d. that there are no other relationships to declare; and
3 Any indemnities given or up-front payments made to the Practitioner.
This declaration is made in respect of ourselves, our partners and McGrathNicol, including but not limited to the
McGrathNicol Partnership, the McGrathNicol Advisory Partnership and their related entities.

A. Independence
We, Joseph Hayes, Jason Preston, William Harris and Matthew Caddy, of the firm McGrathNicol have undertaken a
proper assessment of the risks to our independence prior to accepting the appointment as administrators of the
Declaration of
Independence,
Relevant Relationships
and Indemnities
Companies in accordance with the law and applicable professional standards. This assessment identified no real or
potential risks to our independence. We are not aware of any reasons that would prevent us from accepting these
appointments.

B. Declaration of Relationships
a. Circumstances of appointment
We were introduced to the Companies by Mr Michael Hughes of the firm Minter Ellison on 22 December 2015.
Minter Ellison provides legal advice to the Companies and in some cases their Directors.
We have had numerous meetings with the Companies and the Directors during the period from 24 December 2015
to 4 January 2016 (“the Period”) for the purposes of:
 understanding at a high level the financial position and cash forecast of the Companies for the purposes of
providing the Companies with a review of the solvency position; and,
 (latterly) preparing for our appointment as Administrators including understanding creditor and supplier
information in anticipation of continuing the trading operations of the business on commencement of the
Administrations.
We have also attended on several calls with the Companies' financiers (National Australia Bank, HSBC Bank and
Macquarie Bank) and their advisors during the Period to enable us to advise the Companies on the solvency
position of the Companies.
We have not received any payment for this advice and have confirmed to the Companies that no fee will be payable
under the engagement letter entered into retaining us to provide this advice. As such, we are not creditors of the
Companies.
In our opinion, these matters do not give rise to our having a conflict of interest or duty for the following reasons:
 They were limited to discussions pertaining to the solvency of the Companies and the options available to the
Companies.
 They did not involve any advice to any secured or any other creditor.
 The limited nature and scope of this engagement will not influence our ability to be able to fully comply with
the statutory and fiduciary obligations associated with the voluntary administrations of the Companies in an
objective and impartial manner.
These meetings do not result in a conflict of interest or duty as the advice provided only related to the possible or
potential insolvency of the Companies and alternative courses of action and their consequences for the Companies
and, as noted in the Australian Restructuring, Insolvency & Turnaround Association (ARITA) Code of Professional
Practice (CoPP), such advice does not compromise our independence.
Declaration of
Independence,
Relevant Relationships
and Indemnities
In particular:
 It is recognised by the Courts and the ARITA Code of Professional Practice that pre-appointment advice on
solvency and the insolvency process and available options is necessary and does not amount to an impediment
to accepting an appointment; and
 The nature of the advice provided was such that it would not be subject to review and challenge during the
course of the administration. Nor would the advice influence our ability to be able to fully comply with the
statutory and fiduciary obligations associated with the administration in an objective and impartial manner.
We have provided no other information or advice to the Companies or their Directors prior to our appointments
beyond that outlined in this DIRRI.
b. Relevant Relationships (excluding Professional Services to the Companies)
We or a member of our firm, have or have had within the preceding 24 months, a relationship with:

Nature of Reasons for believing this relationship does not give rise
Name
relationship to a conflict of interest or duty
National Australia NAB holds a charge Each professional engagement undertaken for NAB in relation
Bank Limited (“NAB”) on the whole or to a particular entity or group of entities is conducted on an
substantially the entirely separate basis which has no connection with these
whole of the property appointments.
of the Companies.
These engagements are only commenced after full regard is
McGrathNicol given to potential conflicts of interest in relation to all
undertakes corporate interested stakeholders.
recovery and advisory
work from time to McGrathNicol has not undertaken an engagement for NAB in
time on instructions respect of the Companies.
from NAB.

HSBC Bank (“HSBC”) HSBC is a secured Each professional engagement undertaken for HSBC in
lender and through a relation to a particular entity or group of entities is conducted
security trustee hold a on an entirely separate basis which has no connection with
charge on the whole these appointments.
or substantially the
whole of the property These engagements are only commenced after full regard is
of the Companies. given to potential conflicts of interest in relation to all
interested stakeholders.
Declaration of
Independence,
Relevant Relationships
and Indemnities
Nature of Reasons for believing this relationship does not give rise
Name
relationship to a conflict of interest or duty
McGrathNicol
undertakes corporate McGrathNicol has not undertaken an engagement for HSBC
recovery and advisory in respect of the Companies.
work from time to
time on instructions
from HSBC.
Macquarie Bank MBL is an unsecured Each professional engagement undertaken for MBL in relation
Limited (“MBL”) lender to the to a particular entity or group of entities is conducted on an
Companies. entirely separate basis which has no connection with these
appointments.
McGrathNicol
undertakes corporate These engagements are only commenced after full regard is
recovery and advisory given to potential conflicts of interest in relation to all
work from time to interested stakeholders.
time on instructions
from MBL. McGrathNicol has not undertaken an engagement for MBL in
respect of the Companies.

Minter Ellison Minter Ellison acts as Each professional engagement undertaken after referral by
Solicitors for the and/or on instructions from Minter Ellison is conducted on an
Companies and, as entirely separate basis, which has no connection with these
noted above, that firm appointments.
introduced us to the
Companies. These engagements are only commenced after full regard is
given to potential conflicts of interest in relation to all
Minter Ellison interested stakeholders.
periodically refers
engagements to McGrathNicol has not undertaken any engagement for the
McGrathNicol. Companies (other than that referred to in Part B (a) above),
subject of this recent instruction, and the introduction itself is
Minter Ellison also entirely unconditional.
undertakes legal work
from time to time on The legal work conducted by Minter Ellison on instructions
various corporate from McGrathNicol is also conducted on an entirely separate
Declaration of
Independence,
Relevant Relationships
and Indemnities
Nature of Reasons for believing this relationship does not give rise
Name
relationship to a conflict of interest or duty
advisory and recovery basis, and has no connection with this appointment, and is
engagements under itself only commenced after full regard is given to potential
McGrathNicol’s conflicts of interest.
instructions.

Given these reasons, our independence in acting as administrators of the Companies has not been affected.

c. Prior professional services to the Companies
We or a member of our firm, have provided the following professional services to the Companies, in the 24 months
prior to acceptance of this appointment.

Nature of Professional Service Reasons
Immediately prior to our appointment as Voluntary We believe this relationship does not result in a conflict of
Administrators, McGrathNicol Advisory was interest or duty because:
engaged by Dick Smith Holdings Limited
The work undertaken during the review engagement has
We were introduced to the Companies by Mr assisted us in developing an understanding of the
Michael Hughes of the firm Minter Ellison on 22 Companies and their activities. Much of the investigatory
December 2015. Minter Ellison provides legal work done during the review engagement is work that
advice to the Companies and in some cases their would have been done by us in order to be able to report
Directors. to creditors under s439A of the Corporations Act.
As such, this information will be made available to
We had numerous meetings with the Companies
creditors when we report to them in due course.
and the Directors during the period from 24
December 2015 to 4 January 2016 (“the Period”) for The nature of the draft report provided to the Companies
the purposes of: is such that it would not be subject to review and
challenge during the course of the voluntary
 understanding at a high level the financial
administrations. The review engagement will not influence
position and cash forecast of the Companies
our ability to be able to fully comply with the statutory
for the purposes of providing the Companies
and fiduciary obligations associated with the voluntary
with a review of the solvency position; and,
administrations of the Companies in an objective and
 (latterly) preparing for our appointment as impartial manner.
Administrators including understanding creditor
and supplier information in anticipation of
Declaration of
Independence,
Relevant Relationships
and Indemnities
Nature of Professional Service Reasons
continuing the trading operations of the

business on commencement of the
Administrations.
We also attended on several calls with the
Companies' financiers (National Australia Bank,
HSBC Bank and Macquarie Bank) and their advisors
during the Period to enable us to advise the
Companies on the solvency position of the
Companies.
We have not received any payment for this advice
and have confirmed to the Companies that no fee
will be payable under the engagement letter
entered into retaining us to provide this advice. As
such, we are not creditors of the Companies.
Prior to our appointment as Voluntary We believe this relationship does not result in a conflict of
Administrators, McGrathNicol Advisory was interest or duty because:
engaged by Dick Smith Holdings Limited to provide
The scope of our review was narrow, concerning
financial due diligence services in relation to the
preparation of financial material to understand the
acquisition by Dick Smith of Mac 1 Pty Limited.
business Dick Smith was acquiring, explaining the key
The engagement, undertaken in July and August drivers of profitability, sales analytics, cash and working
2014, was to advise on matters that could have a capital and balance sheet metrics. As such, much of this
material impact on or be significant in the information will be made available to creditors when we
assessment of the proposed transaction. report to them in due course.
McGrathNicol Advisory was paid $35,000 in respect Our report did not comment or advise on the key aspects
of those services by Dick Smith Holdings Pty of the transaction including purchase price and terms.
Limited. Some time was written off in the process
We also note the relative immateriality of the transaction
of completing the review but that time is not
in the context of the Dick Smith group.
material relative to the fees billed
The nature of the advice provided to the company is such

that it would not be subject to review and challenge
during the course of the voluntary administration and the
advice will not influence our ability to be able to fully
comply with the statutory and fiduciary obligations
associated with the voluntary administration of the
company in an objective and impartial manner.
Declaration of
Independence,
Relevant Relationships
and Indemnities

d. Concurrent Appointments to related parties

Nature of Professional Service Reasons
We were concurrently appointed Voluntary We believe this relationship does not result in a conflict of
Administrators of the Companies, being Dick Smith interest or duty because:
Holdings Limited and its wholly owned Australian
The Companies collectively operate the retail and
and New Zealand subsidiaries.
commercial electronics business together. The nature of
the business operations mean that the administrations can
be conducted more efficiently by one practitioner.
Following discussions with management, we have not
identified any conflicts of interests caused from real
dispute as to the facts, or as to the validity of transactions
between Companies.
Notwithstanding that we have made enquiries regarding
threats to independence from group appointment, if a
conflict does arise, we will keep creditors informed and
take appropriate action to resolve the conflict.

e. No other relevant relationships to disclose
There are no other known relevant relationships, including personal, business and professional relationships, from
the previous 24 months with the Companies, an associate of the Companies, a former insolvency practitioner
appointed to the Companies or any person or entity that has security over the whole or substantially whole of the
Companies’ property that should be disclosed.
C. Indemnities and Up-front Payments
We have not been indemnified in relation to the administrations, other than any indemnities that we may be
entitled to under statute and we have not received any up-front payments in respect of our remuneration or
disbursements.