David Jones Collapse: Small Business Suppliers Fear They May Never Recover Thousands as Creditors Meeting Looms

Small businesses left unpaid following the collapse of David Jones are facing deep uncertainty about their financial futures, with some suppliers reportedly owed money dating as far back as April and a critical creditors meeting just days away. The 188-year-old department store entered voluntary administration, triggering a scramble among stockists desperate for answers about whether they will ever see their money.

Receivers FTI Consulting confirmed on Wednesday that 19 stores, mostly located in suburban areas across five states, will continue trading only until the end of December as part of an urgent restructuring. Flagship stores in capital city central business districts have largely been spared, though the Hay Street Mall store in central Perth will also close. David Jones' only New Zealand store, at Newmarket in Auckland, will also shut as part of the restructure.

"The receivers have made the difficult decision to proceed with an urgent restructure of the business, in line with management's plan for the future of David Jones," FTI said in a statement. Staff at the affected stores are being consulted and no final closure dates have been confirmed.

Suppliers Left Waiting as Administration Process Unfolds

For the small businesses caught in the retailer's collapse, the path forward remains deeply unclear. Small Business Association of Australia founder and chief executive Anne Nalder said suppliers have little choice but to wait for the administration process to run its course before they can get a clearer picture of where they stand financially.

Nalder said a creditors meeting is scheduled for November 17, at which creditors will vote on whether to retain the current administrators. She described the meeting as a pivotal moment in the process.

"Once that creditors meeting is over, I think we will get a better idea of how things are travelling," she said.

She cautioned, however, that suppliers are not necessarily at the front of the queue when it comes to recovering money. Administrator costs are among the first expenses to be recouped from whatever funds are available, leaving many small businesses further back in line. Creditors are expected to meet again roughly six weeks after the initial meeting to gain a fuller picture of the company's financial position.

Expressions of interest to buy the David Jones business were due by close of business on Friday. For more background on what the administration means for those affected, see our earlier coverage on what David Jones entering voluntary administration means for shoppers and staff, and what is at stake for David Jones gift voucher holders.

Warning Signs Were There Months Ago

Nalder said the retailer's difficulties did not come as a shock to those watching closely, with warning signs emerging well before the formal administration announcement.

"My understanding is that the administrators looked at DJs about six months ago," she said, adding that the broader economic environment was a contributing factor but not the whole story. "The economy hasn't helped but that is not the single cause."

A member of the founding family echoed that assessment, pointing to a gradual erosion of the retailer's core strengths. Charles Edward Lloyd Jones, a fifth-generation member of the founding family and the last to work in the business, left the company in 1993 after serving as store manager at several Sydney locations.

"If you don't have a unique offer, then it's a race to the bottom with price," the 68-year-old said. "And then if it's a race to the bottom with price, people start cutting staff and when they start cutting staff the service diminishes." He acknowledged that finding a sales assistant in recent years had become a frustrating experience, saying he had circled David Jones stores looking for someone to finalise a purchase "too many times."

Late Payments a Systemic Problem Costing the Economy Billions

Nalder said the David Jones situation has thrown a spotlight on a problem that extends far beyond one struggling retailer. She described late payments from large corporations to small business suppliers as a systemic crisis that has long undermined small operators across Australia.

"For small business owners, the late payments is a serious issue and it's a much wider issue than just DJs," she said. "I think this is a great lesson for all small business owners, because late payments, very late payments, can bankrupt a small business."

She noted that suppliers often carry significant costs of their own, including staff wages and other financial obligations, making prolonged payment delays particularly damaging. Late payments by large corporations cost the Australian economy $7 billion before the COVID-19 pandemic, according to Nalder, and legislation introduced in subsequent years has done little to fix the problem.

"Legislation was brought in a few years ago to correct that, but it was a very, very weak legislation," she said. "The situation hasn't changed very much since that. And we're talking about 120 days, and in some cases 300 days, they don't get paid."

The issue of small business financial pressure is not confined to the retail sector. As this publication has previously reported, small business owners across the country have been vocal about the mounting cost pressures they face in the current economic climate.

With the November 17 creditors meeting fast approaching, suppliers owed money by David Jones will be watching closely for any indication of how much, if anything, they might ultimately recover.