Two ACT pharmacies have been placed under administration, with their director citing rent as a major contributor to their financial troubles
The Amcal Plus – the first ACT pharmacy to join Health Destination Pharmacy – and Guardian pharmacies in the Westfield Belconnen Shopping Centre, in Canberra’s north, are continuing to trade.
They are now being run by administrators George Georges and Ryan Reginald Eagle.
The Federal Court has heard an application to extend the date for a second meeting of creditors in order to allow administrators to continue to explore a possible sale of the businesses or their assets.
Sigma, the main supplier to the pharmacies, is owed approximately $2.6 million in respect of inventory supplied.
Staff are owed leave entitlements of around $51,000. While some staff have resigned voluntarily from the pharmacies, others remain in their jobs and continue to be paid while administrators continue to trade.
Benjamin Jackson, the director of the company which runs the Amcal Plus and Guardian – as well as a related company – prepared a report which outlined their debts of more than $2.8 million.
“The companies have fallen into financial difficulties in recent times,” noted the Court.
“They have attributed this to the significant rent expenses to which [the company running the pharmacies] is exposed.”
“External family issues” were also cited as contributing to the director’s difficulty managing the pharmacies.
Before the pharmacies went into administration, the companies had been examining the potential sale of the businesses, and a reduction of floor space in the rented premises to reduce rent and outgoings.
“These approaches were unsuccessful,” the Court noted.
As well as the debt to Sigma and the accrued staff leave, the pharmacies also owe unsecured creditors around $186,000, and there were additionally undetermined amounts owing to the Australian Taxation Office, the Court heard.
Administrators have continued to pay staff who have stayed on. The administrators said they expect the revenue generated by continuing to trade will cover all current employee entitlements.
A discounted rate of rent has also continued to be paid.
The Court agreed to the extension for the second creditors’ meeting, to a time no later than 8 February 2019.
This position was supported by the pharmacies’ major creditors, including Sigma and the shopping centre landlord.