Mercury rising: debt saga continues

 

NATIONAL: The collapse of wholesale giant Mercury Brands continues to haunt the hands it shook, as several stakeholders prepare to battle over a six-figure company fund.

Mercury Brands Group, which owned a host of well-known brands including Rochford, Crusty Demons and No Fear, was placed into receivership in September last year. Clothing company Australian Horizons purchased the rights to more than 20 of its brands and licenses a month later.

Now Australian Horizons, secured creditor Commonwealth Bank and private company Milfoil have laid claim to a company fund of around $294,000. The fund is under the control of Mercury Brands Group deed administrator Stan Traianedes of S&Z Insolvency.

The sum represents proceeds from the sale of garments to Mercury Brands customers, which included independent boutiques and major retailers such as David Jones, Kmart and Myer.

In a recent hearing at the Federal Court of Australia, Commonwealth Bank and Australian Horizons agreed to sideline their claims until that of Milfoil was resolved.

“The latter two claimants acknowledge that Milfoil’s claim, if established, has priority over theirs,” Justice Ray Finkelstein said at the hearing.

It is understood the two companies came into contact last year, when Commonwealth Bank refused to extend Mercury Brands’ credit facility. A mutual associate suggested the two businesses meet to discuss critical funding opportunities, as Chinese manufacturers were withholding new season stock from Mercury Brands until it honoured its outstanding debts.

According to Federal Court documents, Milfoil put forward a proposal which would ensure Mercury Brands could meet its trading obligations. Milfoil offered to purchase the new season garments from China, on the condition that invoices to Mercury Brands customers were raised in its name. Milfoil would then recover its purchase price and costs (plus a fee) and transfer any surplus proceeds to Mercury Brands.

Due to several discrepancies with the final agreement and payment process – including evidence several customers lodged direct payment with Mercury Brands and not Milfoil – administrators were uncertain how to proceed with Milfoil’s claim at the time of Mercury’s collapse. Judge Finkelstein has ordered further evidence to be tendered to the court before a final decision on Milfoil’s claim is handed down.  

Assia Benmedjdoub