Booktopia resumes trading after being acquired by electronics store digiDirect
Australian online book retailer Booktopia will resume trading after being acquired by online electronics store digiDirect following its collapse due to $60 million in debt.
Booktopia went into voluntary administration in July this year, with most of its debt owed to publishers and around $15 million to customers with orders and gift vouchers.
The Australian online business appointed Keith Crawford, Matthew Caddy and Damien Pasfield from McGrathNicol to oversee a sale, or the selling of parts.
While the sale allows Booktopia to continue operations and retain employees, it does not cover these debts. Only secured creditors and employees are expected to receive payments from the proceeds.
There are approximately 150,000 outstanding orders totalling $12 million, as well as an estimated $3 million owed to customers with gift cards.
The administrators said digiDirect will offer “special arrangements” to customers with unredeemed gift cards.
McGrathNicol partner and administrator Keith Crawford said: “Booktopia has been a key part of Australia’s publishing industry for 20 years, and transitioning the business to such a well-known Australian retailer is a great outcome for all stakeholders.”
digiDirect founder Shant Kradjian was among a range of high-profile bidders, rumoured to include Kogan.com, Woolworths, Dymocks, and QBD Books.
Kradjian said he is excited about the acquisition and glad it could “be kept in Australian hands”.
“There are clear opportunities for shared expertise and efficiencies that will eventually create a better experience for Booktopia and digiDirect customers; however, that is a conversation for down the road.”
digiDirect intends to recruit more than 100 employees, including former Booktopia staff who are encouraged to rejoin the company to “return it to its past glories before growing from there”.
Founded in 2004 by Steve Traurig and brothers Tony and Simon Nash, Booktopia celebrated its 20th anniversary in February.
Before collapsing, it had lost over 98% of its value, last trading at $0.05, partly due to a $6 million fine issued by the Federal Court last year for misleading statements about consumer guarantee rights.
Booktopia admitted that it had told customers they were only entitled to a refund if they contacted them about a problem with their purchase within two business days of delivery.
At the time, ACCC commissioner Liza Carver said: “Consumers are entitled to return faulty products within a reasonable time and receive a refund, repair, or replacement, depending on the nature of the fault.
“We do not know how many consumers may have been deterred from seeking a refund or replacement by Booktopia’s misleading representations on its website,”
A formal relaunch of Booktopia is scheduled for late August once operational processes have resumed.
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