Allphones thrown lifeline to prevent multimillion-dollar collapse

Embattled mobile retail outlet Allphones has been thrown a lifeline by its majority shareholders, after originally pulling funding from the business.

Allphones was acquired by Canadian firm Skidmore Retail Group in May 2016 in an effort to turn the business around after several years of tough losses.

Despite efforts to increase its revenue, Allphones was beset with problems such as the failure of the Samsung Galaxy Note 7, and delays in availability of the iPhone 7, Skidmore notified Allphones on 5 February that it was withdrawing financial support.

Allphones appointed administrators the next day with the view that it would be insolvent without financial support from Skidmore. The company received claims from external unsecured creditors totalling nearly $4 million.

Skidmore has stepped in and proposed six deed of company arrangements covering eight of the nine companies associated with Allphones. Skidmore would contribute $2.1 million across all eight companies, which would cover employee entitlements and licensee and franchisees in full.

All other external unsecured creditors would also receive a partial return on their debt that would be greater than if Allphones was liquidated. The parent company AMT, which employs head office staff, would be returned to Allphones' directors through a creditors' trust.

Skidmore said it would not make a claim to loans it made to Allphones totalling $38.9 million if the deeds are approved. Allphones' intercompany debts would not be claimed either.

Administrators PPB Advisory recommended creditors agree to the deeds, as they would result in a substantially better position for all classes of creditors compared to a liquidation. The administrators advised that there were no offences from Allphones' directors to report, and advised that the company should not be wound up

The second meeting of creditors to decide the fate of the company is scheduled for 5 April.

Allphones suffered a huge financial blow in 2014 after losing a contract to operate 45 Virgin Mobile stores. The owner of the Virgin Mobile brand in Australia – Optus – withdrew its products from Allphones following a lengthy legal proceeding. Allphones suffered a $25 million impairment as a result, as well as the loss of one of its largest suppliers.