Earlier this year, interior designer David Hicks received a phone call confirming his position as a preeminent creator of retail spaces. It was the organisers of the 2011 Australian Interior Design Awards, and his elegantly restrained vision for Bettina Liano’s Westfield Bondi Junction site had been shortlisted in the retail category. It was not the first time the two parties had collaborated, with his firm David Hicks Pty Ltd also developing the brand’s Sydney Strand Arcade and Melbourne Chapel Street spaces.
“The idea of this store was to create space over clutter,” Hicks told Ragtrader at the time. “We did not want the store to be completely covered in clothing, rather create a more gallery-inspired experience.”
For Hicks and other unsecured creditors owed $2.3 million by the now collapsed firm, there was only clutter to sort through at the first meeting with administrators late last month. Minutes from the meeting, obtained by Ragtrader through the Australian Securities and Investments Commission, indicated many trade representatives were still coming to terms with the fall of the 28-year-old design house.
As first reported on www.ragtrader.com.au, administrator John Lindholm of Ferrier Hodgson revealed the brand owed banking firm ANZ $4.3 million, with another $2.3 million to trade creditors and $150,000 to employees. Plant, equipment and store fittings were valued at $2 million, while existing stock was given a retail worth of $1.9 million. Kieren Mihaly as proxy for David Hicks Pty Ltd, which has claimed $28,165 in outstanding debts from Bettina Liano, asked if a preliminary value for the business had been established.
Lindholm claimed he had not formulated a concrete value at the time of meeting, nor received any offers to buy the business from interested parties. He noted however, that any offer was unlikely to exceed the secured debt of $4.3 million. Lindholm also revealed the property securing this debt was owned by a related entity, and that unless an offer above $4.3 million was made, ANZ would need to enforce its security over the property. Unsecured creditors would have no entitlement to any surplus funds in this scenario.
Along with Hicks, other high-profile trade creditors include textile firm Cooper Watkinson ($19,659), The Strand operators Ipoh ($27,044), creative firm Paper Stone Scissors ($8,421), manufacturer Phoenix Denim ($38,183) and government grant specialists TCF Services ($5,403). Meanwhile, the Australian Taxation Office ($648,893), Dome Fashion ($47,875), Greenvale Clothing ($55,919), ICMG ($53,822), Luksus ($48,406), Ningbo Auning Clothing Co ($236,576) and Shino Shouten ($161,357) were among those with more substantial claims. Fairfax Moresby as proxy for Cooper Watkinson asked if company director Bettina Liano had traded profitably in recent years.
“The business had been profitable in prior periods,” the minutes read. “Only in the 12-month period prior to [the] appointment had profitability seriously deteriorated...servicing the secured debt had only become a problem for the company as sales deteriorated, and the business was no longer generating enough cash to meet its overheads.”
Lindholm advised that Liano could potentially be liable for insolvent trading, however appeared to have insufficient assets to satisfy any action against her. Placing the company in liquidation was also undesirable, as it would more than likely result in no dividend for unsecured creditors. Liano had been retained on a basic salary since the appointment of administrators and represented a significant part of the goodwill of the business.
The company entered voluntary administration on July 8, with seven boutiques continuing to trade at the time of administrators’ appointment. The brand employs 90 people and has over 120 stockists across Australia, New Zealand, Indonesia and Malaysia. A formal report to creditors had not been issued at the time of press, with a second meeting of creditors scheduled to take place on August 8.
