Billabong
A Billabong employee opens the company store in central Sydney August 27, 2012. Reuters/Daniel Munoz

The number of struggling Australian companies that were insolvent rose by 15 percent to over 10,000 firms in the last 12 months. Among the companies hit were retailers.

On Monday, Sydney Morning Herald reports that by 2017, retailer Australian Geographic’s 67 stores across the country could close unless a new owner is found. The seller of educational toys, scientific devices, globes and telescopes, which used to enjoy annual sales of $50 million, is losing money due to competition from bricks-and-mortar stores as well as online retailers.

The Myers family, owner of the store since 2007, is selling the business but is having a difficult time finding an interested buyer, reports the Australian Financial Review. The owners set a March 2017 deadline for a lease take-over, but the owners are also considering other alternatives besides shuttering the stores.

Australian Geographic, in a statement, says as a retailer of toys, gadgets, books and licensed products, it is suffering from harsh trading condition and significant competition from discount channels and online retailers. But despite the planned sale or possibility of shuttering, the company assured all employees would get full entitlements, while the Australian Geographic magazine, a distinct business from the retail store, would not be affected by the planned sale or closure.

On the same day, Billabong, a surfwear group based in Gold Coast, says it would pay $45 million, which includes legal costs, to settle a class action lawsuit. The lawsuit was filed in 2015 by the law firm Slater and Gordon on behalf of 730 institutional and retail investors who purchased company securities between Feb 18, 2011 and Dec 19, 2011.

They charged Billabong with misleading and deceptive conduct over a series of earning updates in 2012, reports News.com.au. Newstart 123, a retail investor in Melbourne, the trustee of the Malone Family Superannuation Fund and leader of the claim, charged Billabong of slashing in value by over 50 percent its $30 million investment.

Newstart 123 says the surfwear retailer did not comply with its continuous disclosure obligations. Had Billabong not allegedly misled or deceived stockholders with earnings forecast, Newstart 123 says it could have purchased Billabong shares at lower price or bought stocks in another listed entity instead.

Billabong will bring the proposed settlement to the federal court for approval, but it is not an admission of liability, according to the terms of the settlement deal.

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