Control over the Ally Fashion business has been returned to the company’s director, David Dai, following a lengthy appeal process that ended with creditors accepting a deed of company arrangement (DOCA).
Four months ago, the Federal Court of Australia forced Ally Fashion into liquidation following an application by a landlord for rent arrears. The court appointed Jeff Marsden and Duncan Clubb of BDO Australia on February 28, 2025.
During the liquidation process, around 50 Ally Fashion stores were closed down, with liquidators then entering a license agreement to allow the remaining stores to continue trading.
On May 15, the liquidation was stayed by the Supreme Court of NSW and Ally Fashion was placed into administration, allowing creditors to vote on a DOCA proposed by the director.
The liquidators uncovered that the business owed $56 million across 260 creditors, with the highest-value creditor being DDT Management Pty Ltd – a related party to the Ally Fashion business – owed $46.1 million.
BDO confirmed with Ragtrader that since the DOCA was accepted on June 15, control of the company has been passed back to the director.
However, not all creditors were enthused about the DOCA vote according to meeting minutes on the day it was accepted, obtained by Ragtrader via ASIC. One creditor called it inequitable.
That creditor queried the voting thresholds required for the DOCA proposal, highlighting that the key related party – DTT – had a significant portion of reported debt, claiming this could have had an undue influence on the outcome of the resolution.
“In response, the chairperson [of the meeting] clarified that the [Corporations Act 2001] does not preclude related party creditors from voting on resolutions in a creditors meeting,” the meeting minutes read. “However, the chairperson noted that creditors who are dissatisfied with the outcome of the meeting are able to apply to court for relief.”
Ally Fashion's unsecured creditors, which include suppliers, landlords and utility providers, are expected to receive up to 25 cents on the dollar.
Another creditor asked whether it is the intention of Ally Fashion to continue paying rent and comply with ongoing obligations under continuing leases.
The meeting chairperson confirmed that correspondence had been received from legal representatives acting for a number of landlords, and advised that it is "the clear intention of the deed proponent and the company to continue to honour all existing obligations under leases for stores that remain open, including the payment of future rent."
“To the extent that any minor amendments to the DOCA be required to provide continuing landlords with additional comfort, such amendments can be made following the creditors’ approval of the DOCA but prior to its execution," the minutes read.
“The chairperson expressed the view that the current terms of the DOCA already provide adequate assurance to landlords, but that the issue would be considered if the DOCA is accepted by creditors.”
Around $11.5 million was owed to commercial real estate business Scentre Group, which manages Westfield shopping centres across Australia, according to the new documents.
With around 50 stores closed during the liquidation process, Ally Fashion is believed to be back in business with around 100 stores.
Ragtrader has reached out to Ally Fashion for further comment.