On 5 November 2026, David Jones entered voluntary administration. The directors appointed McGrathNicol as voluntary administrators of ACP Riley Street Midco Pty Ltd, the parent company of David Jones Pty Limited, and its associated companies. At the same time, the group's secured lender appointed FTI Consulting as receivers and managers.
The stores and website are still trading under the control of the receivers. The administrators have started a process seeking offers for a recapitalisation of the business or a sale as a going concern. On the first day, concession brands were reported to be packing their stock into boxes and clearing their counters.
Most of the public discussion has focused on store closures, jobs and customers. For a business that supplied goods, ran a concession, financed inventory or leased premises to David Jones, the more pressing questions are legal:
- Who owns the goods sitting in the stores and distribution centres?
- Can an unpaid supplier take its products back?
- Can a landlord recover premises or call on a bank guarantee?
- Can a payment received last month be clawed back later?
- Who actually has authority to answer these questions when both administrators and receivers are in place?
In a large insolvency, losses are allocated less by the size of each debt than by the quality of each party's legal rights and the evidence that supports them. This article sets out the issues that tend to decide the outcome, using the David Jones appointments as a working example.
01 What is publicly known
The appointments followed a breakdown in negotiations between David Jones and its landlords, in particular Scentre Group, which owns the Westfield centres. On 4 November 2026 Scentre told the ASX that David Jones occupied space in 17 Westfield centres and had paid all rent up to 30 September 2026. Scentre's chief executive said publicly that rent had not been paid since then.
Scentre also disclosed that bank guarantees had been lodged across the David Jones stores in its Australian and New Zealand portfolio. It was reported that Scentre's share of those guarantees is about $30 million, equal to roughly eight months of gross rent, and can be applied against unpaid rent.
David Jones was reported to have 38 sites in Australia at the time of the appointments, with significant store closures expected. Separate appointments were made over the New Zealand company.
Those facts are drawn from public statements and media reports. The legal analysis that follows is general. Nothing in it suggests that any party involved has acted improperly.
02 Possession is not ownership
A retailer can hold millions of dollars of goods without owning all of them. Department stores in particular acquire stock under several different structures:
- Outright purchase. Ownership passes to the retailer on delivery or another agreed event.
- Retention of title. The supplier keeps title until it is paid.
- Consignment. The supplier keeps ownership until the goods are sold to a customer.
- Concession. An outside brand trades within the store and usually owns its own merchandise.
- Agency. The retailer sells goods on behalf of another business.
A supplier whose clothing is still on the shelves may assume it can attend the store, identify its products and remove them. In an administration that assumption is often wrong, for two reasons.
The PPSA treats retained title as a security interest
Under s 12 of the Personal Property Securities Act 2009 (Cth) (PPSA), a security interest is defined by substance rather than form. It expressly includes a conditional sale agreement with retention of title, and a commercial consignment, whether or not the arrangement secures payment.
The consequence is severe. Under ss 267 and 267A, a security interest that is unperfected when the grantor enters voluntary administration generally vests in the grantor. For most suppliers, perfection means a valid registration on the Personal Property Securities Register. A supplier that kept title on paper but never registered, or registered against the wrong entity or with a defective description, may find that the goods now belong to the company and that it is left with an unsecured claim for the invoice.
Priority against the lender
Even a registered supplier must deal with competing interests. A financier with an earlier general security over all present and after-acquired property will ordinarily rank ahead, unless the supplier holds a purchase money security interest (PMSI) that qualifies for super-priority. For inventory, s 62 of the PPSA requires the PMSI to be perfected by registration before the grantor obtains possession of the goods, and the registration must identify the interest as a PMSI. Timing errors of even a day can decide the question.
When the goods have already been sold
Many supplied goods will have been sold before or during the administration. A perfected security interest generally continues in identifiable proceeds under s 32 of the PPSA. In practice, proceeds may have been paid into a general account and mixed with other money, which makes tracing difficult.
The evidentiary problem is often the real obstacle. A well-drafted clause is of little use if the supplier cannot show which goods were supplied under it, which remain unsold, which moved between stores and which have been sold. Delivery dockets, purchase orders, stock reports and sales data become central.
A strong contractual right and a recoverable asset are different things.
03 The secured lender and the receivers
Australian law allows more than one external controller to be appointed to the same corporate group. Administrators are appointed to investigate the company and put options to creditors. Receivers and managers are ordinarily appointed by a secured creditor under its security agreement to take control of secured property and realise it.
A secured creditor with security over all or substantially all of a company's property may enforce it during the first 13 business days of an administration, known as the decision period, under s 441A of the Corporations Act 2001 (Cth). That is why administrators and receivers commonly appear at the same time.
Security is not ownership. A lender's general security attaches only to property in which the grantor has rights. Goods owned by a concession operator, or held under a perfected consignment, may sit outside the lender's collateral or rank ahead of it. Where a supplier's interest was unperfected and has vested in the company, the lender's position may improve.
Receivers will usually want to keep stock in the stores, because selling through continued trading or a going concern sale typically produces a better return than a forced clearance. A supplier claiming ownership of particular goods has the opposite interest. That dispute is not about whether the supplier is owed money. It is about whether the receivers are entitled to deal with the goods at all.
In an appropriate case, the dispute may need urgent declaratory or injunctive relief. Neither side should treat possession, or a bare assertion of title, as the end of the analysis.
04 Concessions: the store may not own the stock
A concession operator can hold several separate rights at once: ownership of its unsold merchandise, a contractual right to occupy the space, an entitlement to sale proceeds collected by the store, claims for unpaid amounts and obligations to its own staff. These rights do not rise or fall together. A brand may be entitled to its stock but have no right to keep trading from the floor, or be owed proceeds it can only prove for as an unsecured creditor.
The label in the agreement is not decisive
Whether the operator is an independent retailer, a consignor, a licensee or an agent depends on the substance of the arrangement. Relevant questions include who sets the price, who contracts with the customer, who receives the payment, who bears the risk of loss, who owns the goods before sale and how the store is paid. The answers determine whether the operator has a proprietary claim to unsold stock, a claim for sale proceeds, or both, and whether the PPSA applies.
Removing stock after the appointment
Under s 440B of the Corporations Act, during an administration an owner or lessor of property that is used or occupied by, or in the possession of, the company generally cannot take possession of or recover that property without the administrator's written consent or the court's permission. Whether that restriction applies to a concession operator's stock depends on the facts. An operator that staffs and controls its own counter may have a strong argument that the goods were never in the company's possession. An operator whose stock was held and sold by store staff is in a different position.
The safer course, before boxes are packed, is to confirm the position in writing with the administrators or obtain advice.
Termination may be restricted
Many supply and concession agreements allow a party to terminate if the other enters administration. For contracts entered into on or after 1 July 2018, s 451E of the Corporations Act generally stays enforcement of a right that arises only because of the administration. A business may still be able to rely on a separate default, such as non-payment, but the ground for termination must be identified carefully. Some contracts and rights are excluded from the stay by regulation.
05 Landlords: rent is only the beginning
A landlord's exposure may include arrears, outgoings, turnover rent, make-good obligations, re-letting costs and the effect on the rest of the centre when an anchor tenant leaves.
The moratorium on recovering premises
Section 440B also restricts a lessor from recovering property used or occupied by the company without the administrator's consent or the court's permission. A landlord therefore cannot ordinarily change the locks or re-enter merely because the tenant is in arrears. The restriction gives the administrators time to decide which leases matter to a sale.
Rent during the administration
Under s 443B, an administrator becomes personally liable for rent for property the company continues to use or occupy after five business days, unless the administrator gives notice within that period that the company does not propose to exercise rights in relation to the property. Those notices are an early indication of which stores the administrators intend to keep. Arrears from before the appointment remain an unsecured claim against the company.
Bank guarantees
A bank guarantee is a claim against the bank, not the company. The moratorium does not ordinarily prevent a landlord from calling on an unconditional guarantee, and courts are generally reluctant to restrain a call except where the underlying contract limits it or the call would be fraudulent or unconscionable. The lease and the guarantee should still be checked for conditions, expiry dates, notice requirements and the defaults that permit a demand.
Effects on other tenants
The loss of an anchor tenant can reduce trade for smaller retailers in the same centre. Whether those tenants have any remedy depends on their leases, including any co-tenancy, exclusivity or rent relief provisions. Many leases contain none, and a fall in foot traffic does not by itself give a tenant a claim.
06 Being owed money is not the same as being paid
Creditors are not paid according to who is owed the most or who has waited longest. The nature of each creditor's legal interest decides the outcome. A trade creditor owed $2 million may recover little, while a smaller creditor with perfected security over particular assets may be paid in full.
In a retail insolvency, the main groups are usually:
- Secured financiers, with interests in collateral subject to PPSA priority rules.
- Suppliers with perfected PMSIs, with potential priority over the inventory they supplied.
- Concession operators and consignors, with possible proprietary claims as well as unsecured claims.
- Landlords, with unsecured claims for arrears, often supported by bank guarantees.
- Employees, with statutory priority for wages, leave and redundancy entitlements.
- Trade creditors and service providers, ordinarily unsecured.
- Customers holding gift cards, deposits or undelivered orders, ordinarily unsecured.
One business can sit in more than one category. A supplier may have an unsecured claim for invoices and a separate proprietary claim to identifiable stock.
Circulating assets and employee priority
If the company is wound up, s 556 of the Corporations Act sets the priority order, starting with the costs of the external administration and followed by employee entitlements ahead of ordinary unsecured creditors. Section 561 gives those employee entitlements priority over a secured creditor whose security is over circulating assets, such as inventory and receivables, where the company's other property is insufficient to pay them.
This matters for retailers, whose main assets move through the business continuously. A PPSR registration alone does not show what a lender will actually recover.
07 Administrators and receivers: who decides what?
Voluntary administrators take control of the company under Part 5.3A of the Corporations Act. They investigate its affairs and report to creditors, who decide at the second meeting whether the company should execute a deed of company arrangement, be wound up or return to its directors. The convening period for that meeting is ordinarily 20 business days from the start of the administration and can be extended by the court.
Receivers act under the security documents and the Corporations Act to take possession of, manage and realise the secured property, and distribute the proceeds in the order the law requires. The scope of their powers depends on the security and the appointment instrument. An appointment over a parent company does not automatically extend to every subsidiary. Each company, security and appointment must be checked separately.
The two appointments can pull in different directions. Administrators may favour a recapitalisation that compromises creditor claims. Receivers may favour a faster realisation of particular assets. Often the objectives align, because a going concern sale is usually worth more than a break-up. Where they do not, the question is whether each controller is acting within their powers. Disputes about the validity of a security, the scope of an appointment, or whether a particular asset is secured property can be brought before the court.
Practically, a creditor needs to know which controller has authority over the property or contract in question. Correspondence addressed to "David Jones" generally may not reach the person who can resolve the issue.
08 Payments before the appointment can be clawed back
A supplier that chased overdue invoices for months and was finally paid shortly before the appointment may regard the money as recovered. If the company is later wound up, a liquidator may examine whether the payment was an unfair preference under s 588FA of the Corporations Act.
Broadly, an unfair preference is a transaction between the company and an unsecured creditor that results in the creditor receiving more than it would have received in the winding up. To recover it, the liquidator must also show that the company was insolvent at the time, or became insolvent because of the transaction, and that it occurred within the relation-back period. That period is generally six months before the relation-back day, or four years for a related entity.
Running accounts and the good faith defence
Where payments form part of a continuing business relationship, s 588FA(3) treats the transactions as a single transaction. The High Court explained the approach in Airservices Australia v Ferrier (1996) 185 CLR 483. In Bryant v Badenoch Integrated Logging Pty Ltd [2024] HCA 4, the High Court held that a liquidator cannot choose the point of peak indebtedness as the start of the running account. The net effect of the whole continuing relationship in the relevant period must be considered.
A creditor may also have a defence under s 588FG(2) if it received the payment in good faith, had no reasonable grounds to suspect insolvency and provided valuable consideration. Emails threatening to stop supply unless arrears are paid can be used against a creditor on that question.
Other voidable transactions
A liquidator may also examine uncommercial transactions (s 588FB), unfair loans (s 588FD), unreasonable director-related transactions (s 588FDA) and creditor-defeating dispositions (s 588FDB). A transaction is not voidable merely because it occurred before the appointment, but businesses that received payments or bought assets from a distressed company should keep the records that explain why the transaction was commercial.
09 When financial distress becomes personal liability
Falling sales, rising costs and creditor pressure do not by themselves mean a company is insolvent. An administration does not establish that its directors breached their duties.
Section 588G imposes a duty on a director to prevent the company incurring a debt where the company is insolvent, or becomes insolvent by incurring it, and there are reasonable grounds to suspect insolvency. Defences are found in s 588H. The safe harbour in s 588GA protects a director from civil liability for debts incurred in connection with developing and taking a course of action reasonably likely to lead to a better outcome than immediate administration or liquidation, provided the conditions, including payment of employee entitlements and tax reporting, are met.
In a corporate group, s 588V can also make a holding company liable for debts incurred by an insolvent subsidiary in comparable circumstances.
Solvency is a cash flow test: whether the company can pay its debts as and when they fall due. In a later claim, the evidence usually includes management accounts, cash flow forecasts, aged creditor reports, financier correspondence, covenant reports, board minutes and records of attempts to raise funds. The question is whether directors had a proper basis for their decisions at the time.
10 Customers and gift cards
A gift card is generally a contractual promise to supply goods or services. Its holder does not own any part of the stock or cash, and ordinarily has an unsecured claim if the card is not honoured. Whether gift cards continue to be accepted during the administration, and whether a buyer of the business takes them on, are commercial decisions for the administrators and any purchaser.
Customers who paid for undelivered goods, or bought goods that prove faulty, retain their rights under the consumer guarantees in the Australian Consumer Law. Having a valid right and being able to recover money from an insolvent company are different matters. The same principle applies to every creditor: establishing liability does not establish recoverability.
11 The right entity and the right records
Large retail groups operate through several companies. The entity that signed a supply agreement may not be the one that received the goods, paid the invoices or operated the store. A supplier may have traded with a familiar brand for years and only now discover that its contract, invoices and deliveries involved three different companies.
Each company is a separate legal person. The insolvency of one does not make another liable for its debts unless a guarantee, security, agency or other obligation creates that liability. A proof of debt lodged against the wrong company, or a PPSR registration against the wrong grantor, can cause delay or defeat a claim.
The disputes that follow usually turn on documents: which entity contracted, whether goods were sold or consigned, which company paid, whether a security interest attached and which company now holds the proceeds. The legal principle is often clear. Proving it is the difficult part.
12 What to do in the first days
Stock can be sold, contracts can be terminated and assets can be realised within days of an appointment. Waiting for the creditors' meeting can cost a business its best options.
ASIC Information Sheet 74 explains the voluntary administration process, including creditor rights, proofs of debt, meetings and possible outcomes.
13 How GopherWood Lawyers can help
Corporate insolvency is often less about how much a company owes than about who has enforceable rights over particular assets, which contracts survive, how competing securities rank and which transactions can be challenged. A supplier may hold title but have failed to perfect it. A landlord may have a large claim but be unable to recover the premises. A lender may hold extensive security yet face competing claims to particular stock.
GopherWood Lawyers acts for businesses, creditors, suppliers, landlords, financiers and directors in debt recovery and insolvency disputes, including PPSA and retention of title claims, recovery of goods, unfair preference and voidable transaction claims, insolvent trading claims, disputes with receivers, administrators and liquidators, and urgent applications for declaratory or injunctive relief.
If your business is owed money by, has goods held by, or leases premises to a company in administration, bring your contracts, invoices, PPSR records and the controllers' correspondence to our first discussion.
Call 02 9160 2157 or contact GopherWood Lawyers about your matter.
This article reflects public information available on 6 November 2026. It provides general information about Australian law and is not legal advice. The position of any creditor depends on its contracts, registrations and the facts.
14 Sources and further reading
- ABC News, "David Jones calls in administrators, leaving retailer's future in doubt", 5 November 2026.
- Ragtrader, "Official: David Jones enters administration", 5 November 2026: appointments and corporate structure.
- ABC News, "David Jones on brink of collapse and behind on rent for Westfield stores", 4 November 2026.
- Ragtrader, "Westfield puts a number on David Jones' exposure", 4 November 2026: Scentre's ASX disclosure and bank guarantees.
- Personal Property Securities Act 2009 (Cth): especially ss 10, 12, 14, 32, 62, 267 and 267A.
- Corporations Act 2001 (Cth): especially Part 5.3A, ss 439A, 440B, 441A, 443B, 451E, 556, 561, 588FA to 588FG, 588G, 588GA, 588H and 588V.
- Airservices Australia v Ferrier (1996) 185 CLR 483: running accounts.
- Bryant v Badenoch Integrated Logging Pty Ltd [2024] HCA 4: the peak indebtedness rule.
- ASIC Information Sheet 74, Voluntary administration: a guide for creditors.