Dick Smith's creditors decide fate of retailer

By Emily Bencic

The second Dick Smith creditors’ meeting was held at the Wesley Conference Centre in Sydney on Monday, where creditors voted to liquidate the company and appoint McGrathNicol as the liquidator. The key findings from the McGrathNicol report released on 13 July 2016 were presented at the meeting, where creditors also agreed to form a committee of inspection to consult with the liquidators.

Auditor Deloitte will be targeted by McGrathNicol for potential breach of accounting standards as some of the rebates in the report were classified as marketing rebates when they should have been classified as inventory rebates to inflate profit for the 2015 financial year.

Marketing rebates are recognised immediately as a profit, whereas inventory rebates are recognised when the inventory is sold, which may be in a later financial period. Dick Smith posted an EBITDA of $72 million in the 2015 financial year. Excluding rebates, it would have posted an EBITDA of minus $119 million.