Unsecured creditors of one of the island’s longest-established retail organisations were left completely out of pocket when the operation went under, one of the company’s joint provisional liquidators has revealed.

Charles Thresh and Michael Morrison were appointed as JPLs of AS Cooper and Sons Ltd by order of the Supreme Court on June 12, 2020. A winding-up order was issued by the court the following month.

In a letter sent for and on behalf of AS Cooper and Sons Ltd (in liquidation), and addressed to “all known creditors and contributories”, Mr Thresh has provided an overview of the liquidation, actions taken by the JPLs to wind up the company’s affairs, and their intention to seek release of their appointment as JPLs and for the company to be dissolved.

The company records of AS Cooper’s listed unsecured creditors in the amount of $3.3 million, of which $2.5 million consisted of accounts payables, the majority of which was aged over 90 days.

In addition, based on the company’s books and records, together with the proof of debts filed by the preferential creditors, the company had 15 preferential creditors with claims totalling $322,501.

After realisation of materially all the assets in the liquidation estate and after accounting for the costs of realisation and the liquidation process, on April 30, 2021, the JPLs declared a first and final dividend to the employee preferential creditors, representing $0.25 on the dollar.

Given the level of employee claims and level of funds available, there were insufficient funds to enable any distribution in respect of government taxes.

Therefore, there were also insufficient funds to enable a distribution to unsecured creditors, and so the JPLs did not seek to convene a meeting of creditors or call for claims from unsecured creditors.

AS Cooper started trading in 1897 as a general store that evolved into a retailer of women’s, men’s and children’s fashion, becoming well known as a retailer for luxury brands.

However, declining sales owing to a decreasing population, customer preferences and the impact of the Covid-19 pandemic led to cash-flow issues to the extent that the company became unable to pay its debts as they fell due, Mr Thresh wrote.

He added that management of the company’s inventory also suffered as it continued to accumulate outdated inventory.

The directors of the company decided that it should be wound up and petitioned the Supreme Court for the appointment of JPLs.

Before their appointment, the company operated Vineyard Vines as well as men’s and ladies’ stores in Hamilton and operations in Clocktower Mall at Royal Naval Dockyard and at the Fairmont Southampton hotel. It also had a warehouse on Mill Reach Lane in Pembroke.

Since their appointment, Mr Thresh wrote, the JPLs’ primary focus was to achieve maximum asset realisations from the company’s business assets.

They realised the amount of $386,903 for assets having a book value of $1,004,823 as at May 31, 2020.

That included $348,342 for stock on hand having a book value of $863,417.

Mr Thresh said the JPLs’ strategy to realise the assets focused on seeking a sale of either all or parts of the business as a going concern.

They conducted a formal marketing exercise for the business or parts thereof but despite expressions for parts of the business, no firm offers were received for parts of the business that were capable of sale.

The amount of $15,000 was received from Vineyard Vines LLC in relation to assets held in the Vineyard Vines store.

The JPLs accepted an offer of $47,600 for stock at the AS Cooper Man premises, which included the costs of removing the inventory from the site.

The remainder of the stock was located at the AS Cooper Ladies store, and some residual inventory from the Fairmont Southampton store.

The highest offer received for the remaining inventory was approximately $50,000.

The JPLs declined the offer in favour of having former management run a liquidation sale, which resulted in gross realisations totalling $261,992.

Former vendors bought back inventory totalling $17,250, and the sale of an antique Wedgewood collection and various glassware netted $6,000 and $250, respectively.

The company warehouse was subject to a mortgage against which there was an outstanding liability of approximately $1.5 million. On appointment of the JPLs, AS Cooper was in default of the mortgage and shortly after the JPLs’ appointment the mortgagee appointed a receiver over the warehouse.

Mr Thresh wrote: “The warehouse was professionally valued at $1.65 million. However, in addition to the outstanding mortgage amount of $1.5 million, associated arrears in land tax and costs for removal of scrap, it became clear that a deficit would arise on a sale on the warehouse.

“As such, the JPLs agreed to the receiver’s proposal to assign title to the warehouse to the mortgagee, provided the JPLs’ costs for this process were met.”

The company had fixed assets comprising various other fixtures and fittings, a motor vehicle, forklift and two computers.

The JPLs marketed these items for sale and agreed for the remainder of inventory, fixtures and fittings and other items at the warehouse to be sold in the liquidation sale conducted from the Reid Street store, which raised $22,205.

HSBC Bermuda held a fixed and floating charge, of which the company was indebted by approximately $265,000. This indebtedness was met by the guarantors of HSBC Bermuda’s facility and the bank’s security was subsequently released, Mr Thresh wrote.

The JPLs’ fees for the liquidation process totalled $156,331.

The balance remaining in the liquidation bank account of $86,307 will be used to meet legal costs and the JPLs’ costs to close the estate.