The administrators of online book retailer Booktopia have confirmed they have secured a buyer for the troubled business.

The Australian company appointed administrators in July, after building up deep debts totalling an estimated $60 million.

The vast majority was owed to publishers who had been supplying it with stock, while $15 million was owed to customers with orders and gift vouchers.

McGrathNicol said it had organised the sale of Booktopia on Friday to online electronics store digiDirect, which it described as “a leading Australian-owned omnichannel consumer electronics retailer”.

“Booktopia has been a key part of Australia’s publishing industry for 20 years, and transitioning the business to such a well-known Australian retailer is a great outcome for all stakeholders,” Keith Crawford, a partner and administrator at McGrathNicol, said.

The administrator said the deal enabled the immediate resumption of trading for the business.

However, the ABC understands publishers and customers are unlikely to see anything from the sale.

DigiDirect has been contacted for comment.

DigiDirect will retain Booktopia employees

The sale was managed by McGrathNicol’s deals team and supported by Booktopia’s secured creditor, Moneytech, which provided funding to the administrators to preserve the business pending the transaction.

As it was finalised, digiDirect confirmed to McGrathNicol that it intended to hire more than 100 employees, with former Booktopia staff encouraged to rejoin the group.

“We are incredibly pleased to have completed the sale of the Booktopia business to the owner of digiDirect,” Mr Crawford said.

“The transaction will result in the retention of all remaining employees, the recruitment of some 100 additional employees and continuity of supply for Booktopia’s trade creditors.”

What happens to previous book orders?

When Booktopia went into administration, there were about 150,000 orders worth about $12 million that went unfulfilled, many of them pre-ordered books that had not yet been delivered to the company.

An estimated $3 million was also owed to customers with gift cards.

The administrators said digiDirect was offering “special arrangements” to customers with unredeemed gift cards.

However, it is understood the final sale price was nowhere near the $60 million Booktopia owed to creditors and the deal does not include the book retailer’s debts being paid off.

McGrathNicol said the sale price “will not be sufficient to provide for a return to shareholders”.

This means only secured creditors like banks and Booktopia’s employees are likely to see cash from the sale.

After the retailer’s collapse, some customers who were owed books from the company managed to get refunds from their credit providers, such as PayPal, while publishers might have had their debts covered by credit insurance.

One prominent publisher told the ABC they welcomed Booktopia’s sale to digiDirect because it had online sales experience and cashflow that would allow sales to continue for publishers.

Booktopia’s main competitor was American technology giant Amazon, a sprawling online marketplace that has become the largest online retailer in the world.

Industry players say the gap in the online sales market left by Booktopia’s collapse has seen customers migrate to Amazon as well as other players such as The Nile.

Booktopia was founded in 2004 by Steve Traurig and brothers Tony and Simon Nash.

It celebrated its 20th year in business in February, but since its debut on the ASX in December 2020 it lost more than 98 per cent of its value and last traded at $0.05.

Before it went into voluntary administration, the book retailer had been grappling with profit losses, a fine from the consumer watchdog for breaching consumer law with deceptive marketing tactics, and a revolving door of senior executives.

Booktopia’s chief financial officer Fiona Levens resigned in May and chief executive David Nenke followed in June.

Administrators are now preparing to convene a second creditors meeting.