JAN Cameron's failed company Retail Adventures could be open to $48 million in litigation for trading while insolvent if creditors decide to liquidate the company next month.
Creditors will meet in Sydney on September 2 to decide whether to back a recommendation by company administrator Deloitte to wind the company up.
A creditors report released this week recommended liquidation, rather than a deed of company arrangement proposed by Ms Cameron, to deliver a higher return to unsecured creditor debts albeit over a longer period of time.
Ms Cameron and other former directors under the deed would pay $5.5 million to Deloitte to distribute to the company's unsecured creditors for a return of 6.46 in the dollar for their debts.
The administrators have rejected this offer in favour of liquidation which would see a return of between 20.71 and 45.12 in the dollar. Retail Adventures owned all 27 Chickenfeed stores in Tasmania, as well as mainland outlets Sams Warehouse, Crazy Clarks and Go-Lo.
Ms Cameron bought Retail Adventures out of receivership for $80 million in 2009.
The company went into administration again on October 26 last year but Deloitte believes that the company may have been insolvent as far back as July 2011.
The administrators noted in its report that analysis indicated it was insolvent from at least May 2012, five months before it entered administration.
``This date is also important because the vast majority of the unrelated outstanding debt was incurred after this date,'' the report said.
``This may lead to an insolvent trading claim against the directors of (Retail Adventures) and its parent entities for approximately $48 million.''
Preferential payments paid to creditors worth $50 million may also be recovered for the benefit of all unsecured creditors.
The company's creditor balance averaged $91 million for 19 months before administration with an average overdue balance of $35 million
The balance was highest in last October at $119.65 million and at its lowest in July 2012 at $74.39 million.
The company last year employed 1266 permanent full-time employees and 4816 part-time and casual employees.