👉 Background: Jeanswest’s first store opened in Perth back in 1972 and grew to become an Aussie-go-to for denim and other clothing. It grew to nearly 150 stores around Australia by 2020, but faced challenges in 2020 when it fell into administration. It was bought by Harbour Guidance who tried their best to revive the brand over the the last 5 years.

‍👉 What happened: Now, Jeanswest finds itself in a pickle tighter than freshly-washed skinny jeans. It has warned that it will (re)enter administration with the plan to shut down all of its remaining 90 stores and cut up to 600 jobs.

‍👉 What else: With Jeanswest going into administration, all of its creditors will be chasing its debts… but they’ll all need to wait patiently in line because there’s an order for these things.

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‍What's the key learning?

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‍💡When a business collapses, there’s a very specific pecking order for who gets paid first. In this case, Jeanswest has appointed an administrator, Pitcher Partners, whose primary goal is to restructure Jeanswest's finances, sell assets and potentially even find a new owner for the business.

💡When it comes to debt repayments, there's a strict order of repayment:

1. Secured creditors: These are creditors whose debt is backed by a specific asset (as collateral).
2. Preferential unsecured creditors: These are creditors who receive preferential treatment. Often employees will be in this category and they will get any remaining funds after the first group has been paid
3. Unsecured creditors: These are creditors owed money but without a security interest. Often this will include customers, contractors and suppliers
   

💡Right now, the administrator is still crunching the numbers to figure out the balance owed to Jeanswest’s creditors - but one's things for sure - it’s not just denim that’s distressed around here.