SurfStitch co-founder Lex Pederson says the administration process has inflicted unnecessary damage on the embattled surfwear business, but he believes a new deed of company arrangement (DOCA) proposed by non-executive director Abigail Cheadle on Tuesday could revitalise the brand.
“If it is set on that path, I am willing to reinvest in that. The turnaround is possible. It just needs to happen quickly – enough is enough,” Pederson told Inside Retail.
Pederson acknowledged that SurfStitch was not exactly thriving when the board voted to put the business into administration last year but says it could have been avoided.
“The business was clearly under pressure – there were fires on several fronts – but I do believe that administration could have been avoided. It’s crippling for the business and needs to end immediately.”
Cheadle noted that SurfStitch was solvent when it entered administration, a move she didn’t agree with it at the time.
“All I can say is that Sam Weiss, Mike Sonand and Harry Hodge voted to put the company into administration when it was solvent. I abstained and wrote a two-page statement as to why,” Cheadle told Inside Retail.
Cheadle, who has a background in restructuring companies and countries such as Russia and Iraq, says she thought the company could be restructured by selling assets and continuing on trade credit.
“Instead, it has cost $7 million in administrative and legal fees and other costs,” she said.
Cheadle says she sought to avoid these costs by proposing a DOCA soon after the business went into administration last year but has now had to find capital to recapitalise SurfStitch, due to the lengthy process.
