Family-owned office supply business with turnover of $15 million collapses

A family-owned office supplies business that employs 40 people in Western Australia has collapsed into voluntary administration.

The McLernon Group has a sizeable piece of the Western Australian office supplies business market through its retail arm McLernons Everything Business, which is Officeworks’ number one competitor in Perth.

But flat retail conditions in Perth have taken their toll on the group, which appointed Brent Kijurina, Richard Albarran and Cameron Shaw of Hall Chadwick as administrators on July 29.

Jarrod Sierocki, managing director of insolvency consulting firm Insolvency Guardian, which is representing the McLernon Group, told SmartCompany the group turned over approximately $15 million in 2013.

Sierocki says the group owes creditors more than $2 million, but the recent consolidation of some of the chain’s retail outlets into the one store in Welshpool has put the McLernon Group in a “really viable position”.

Sierocki says a deed of company arrangement will be presented to creditors within the next four weeks and Insolvency Guardian will be recommending the plan, which will return the company to sole director Peter McLernon.

“We certainly believe the deed of company arrangement will be settled and it is a far better option than liquidation,” he says.

Kijurina told SmartCompany the administrators are continuing to trade the company on a “business as usual” basis and are not currently looking to sell the business.

Kijurina says economic conditions in WA are largely to blame for the company entering administration.

“A downturn in economic conditions in WA, caused by the mining industry moving from construction to production phase and resulting in a large number of surplus overheard for the company, placed the director in a position to embark on a restructure program many months ago,” says Kijurina.

“The voluntary administration is intended to be the last mechanism of the restructure process to enable the longevity of the business,” he says.

The McLernon Group was founded in 2000 by Peter McLernon and his son Allan, who started out selling used office furniture and fittings under the name of McLernons Everything Business.

At one stage, the group had retail outlets in Welshpool, O’Connor, Joondalup and Osborne Park in Perth, but the Welshpool outlet is the only store still trading. The store is supported by a 12,000 sqm warehouse.

During the growth of the business, the group expanded to include an import wholesale company, MSD Wholesale, a cabinet-making factory, MSD Cabinets, and an auctioneering business, Portacorp.  The group also previously purchased a 50% shareholding in Hong Kong-based exporting agent, Kingfeng Export Corporation.