A group of companies, including Bensimon Retail Group (BRG), which trades as Bensimon Diamonds at Crown Melbourne, owes almost $7 million to creditors.
The two other businesses involved are RR Fine Jewels (RRFJ) – trading as Elizabeth Fine Jewellery in Elizabeth Street, Melbourne – and Bensimon, an online jewellery sales business.
Director Ronnie Ben-Simon placed all three companies into voluntary administration on 26 May under the control of Shane Cremin and Gary Fettes from the Melbourne office of insolvency firm, Rodgers Reidy.
Fettes confirmed to Jeweller that the three businesses have been put in liquidation following a second creditors meeting that took place on Friday 1 July.
The administrators report, dated 22 June, stated: “The director disclosed $2,508,070 as owing to the unsecured creditors of BRG, $4,063,966 owed to the unsecured creditors of RRFJ and $257,838 owed to the unsecured creditors of Bensimon.”
The Australian Taxation Office is listed as a creditor with $300,000 outstanding while other trade creditors of all three companies are collectively owed more than $2 million.
In the report, the administrators outlined payments by the three companies totalling in excess of $1.5 million made in the period leading up to their appointment that may have unfairly favoured certain creditors.
“…our investigations with respect to Unfair Preferences have identified several payments made within the six month period prior to the date of our appointment that may be deemed unfair preference payments,” the report states.
The administrators did not detail who the payments were made to but they went on to say: “If the companies are placed into liquidation at the forthcoming meeting, further investigations will be required to determine the relationship between the companies and the respective creditors.”
Reasons for failure
In a section titled Causes of Financial Difficulty, the report details some of the causes for the collapse. It outlines, for example, that shareholder and former Bensimon director Richard Hayward lent the companies about $3 million for the purchase of the businesses and various working capital requirements between RRFJ’s acquisition of Elizabeth Fine Jewellery in September 2013 and April 2015.
In April 2015, after “escalating disagreements over the running of the businesses” between Hayward and Ben-Simon, the report states Ben-Simon purchased Hayward’s share in the companies for $3.13 million – the amount he had loaned the companies plus $130,000 to acquire ownership.
Ben-Simon attributed the failure of the companies to poor sales and the pay out made to Hayward, according to the report.
The administrators stated their own investigations indicated declining sales contributed to the financial position but other factors included: withdrawal of “significant” working capital from the companies; a lack of internal controls over sales, stock and cash management; and “poor or inadequate” management of the companies’ affairs.
BRG had $49.86 recorded in its bank account the date it went into administration. Crown Melbourne Limited, which owns the Crown Entertainment Complex, was owed nearly $30,000 in rent for the month of April to May 2016.
Administrators have negotiated a rent-free period until 14 July to enable Bensimon to continue to trade; however, the debt will continue to accrue during this period.
Fettes said the administrators were in ongoing negotiations with a potential purchaser of the Bensimon Diamonds business at Crown Casino.
He added that Crown Casino management had agreed to allow the business to remain open for several more weeks in order to complete a sale.
Editor’s note: The Melbourne-based Bensimon Retail Group Pty Ltd and/or Bensimon Diamonds have no connection to the Adelaide-based Transworld Enterprises Pty Ltd, owned by Albert Bensimon. In addition, Ronnie Ben-Simon and Albert Bensimon are not related.