Owners of Booktopia Group Ltd (ASX: BKG) shares are facing more bad news after the company entered administration.
Booktopia described itself as Australia’s biggest bookstore, with the most extensive library. It’s an online retailer of books.
Voluntary administration
McGrathNicol Restructuring has announced that on 3 July 2024, partners Keith Crawford, Matthew Caddy and Damien Pasfield were appointed as voluntary administrators of Booktopia Group Limited and its subsidiaries.
In an announcement to the ASX, the administrators said they are undertaking an “urgent assessment” of Booktopia’s business while options for its sale and/or recapitalisation are explored.
Booktopia shares have been suspended from trading since mid-June as it faced “broader liquidity challenges” and tried to find alternative sources of funding liquidity to meet redundancy costs and provide it with ongoing working capital.
The business had been seeking support from “suppliers, existing shareholders and other potential funding sources.” It was also exploring alternative strategic options.
Booktopia previously said it required this funding to continue to be financially viable and for Booktopia shares to trade. Booktopia shares will remain suspended from trading during the administration process.
Creditors and interested parties
McGrathNicol said a first statutory meeting of creditors must be held within eight business days after the administration begins and will take place by Monday, 15 July 2024. Meeting notices setting out the time and location of the first meeting of creditors will be distributed to creditors in advance of the meeting.
The legal firm also called for interested parties that want to recapitalise or acquire Booktopia (or any of its assets) were asked to contact the administrators.
Final thoughts on Booktopia shares
Time will tell what the fate of Booktopia is. It’s possible the business may return to trading, but it’s also possible the business could be taken private without shareholders getting much, or anything, from the sale.
We’ll have to see what happens next. I think this can show the importance of cashflow and having a good balance of cash on the balance sheet.
