Despite hopes for a last minute white knight, it seems almost certain now that music instrument giant Allans Billy Hydes will collapse under huge debt, with doors for all company owned stores expected to close in the coming weeks.
The news also means that about 610 jobs are likely to be lost, as received have failed to find a buyer for the chain’s owners, Australian Music Group, whose financial position was so dire that music stores would not honour any pre-purchased gift vouchers and deposits were not be refunded.
The local music industry’s head is still spinning following the unexpected and shocking news that music store group Allans & Billy Hyde had entered receivership amidst debts of nearly $40 million.
Ferrier Hodgson partners James Stewart and Brendan Richards were appointed as the administrators of the receivership by secured creditor Revere Capital, which is owed $27 million by AMG (owners of Allans & Billy Hyde), and the pair had hoped to sell the business to service the debt.
The significant restructure announced overnight by Ferrier Hodgson will result in the immediate loss of 56 jobs predominantly at Australian Music Groups head office in Rowville, Melbourne.
While the restructure is designed to prepare AMG for eventual closure, the Receivers, Ferrier Hodgson partners James Stewart and Brendan Richards, remain in discussions with interested parties in case a last minute sale saves the business.
But with no buyers on the horizon, it now seems not if but when the company will be wound up. In an ominous sign for the business, receivers have announced the immediate sale of about $45 million in stock cleared for discount.
Ferrier Hodgson partner James Stewart announced the major stock realisation sale, which will begin tomorrow, Thursday September 13. He said it will provide Allans Billy Hyde clients and music industry enthusiasts with significant opportunities to save money on their favourite brands.
Receivers say that the controlled closure process will see the AMG business, which incorporates Allans Billy Hyde, Musiclink and Intermusic, wound up over the next few weeks.
Stage Systems is not in receivership and will continue to trade normally. The Allans Billy Hyde franchise stores are independently owned and are not in danger of closure.
“After serving consumers and the music industry for generations, the likely closure of the business and the loss of these jobs is very disappointing for all concerned,” Mr Stewart said.
“We will work with the Administrator to enable affected employees to make claims for their entitlements through the Government Entitlements and Redundancy Scheme (GEERS) as quickly as possible.”
There are 24 company-owned stores around Australia, including eight in both Victoria and New South Wales.
The news of the company’s receivership comes only two years after their merging, with the two businesses combining forces in July 2010 to face down financial struggles to begin with.
Despite annual sales of $110 million as of June 30, Mr Stewart said the music stores had been affected by “the decrease in consumer discretionary spending currently being felt by many Australian retailers.”
Allans Music has a history as a music retailer for over a century-and-a-half, established in the 1850s when Joseph Wilkie and George Allan opened a music warehouse in Melbourne’s Collins Street.
Billy Hyde was first formed by the titular drum manufacturer, who perfected his production line of drum kits in the 50s and 60s, opening his first store in Melbourne’s Flemington in 1962.Write a Letter to the Editor