Mosaic Brands – the business that had managed retail brands such as Noni B, Katies, Millers and Rivers – is set to be officially wound-up after creditors voted to place it into liquidation at a reconvened meeting yesterday.
The vote comes after the voluntary administrators – being Vaughan Strawbridge, Kathryn Evans, Kate Warwick and David McGrath of FTI Consulting – recommended liquidation as the most appropriate course of action for the group in the absence of a deed of company arrangement (DOCA) or other proposal.
All four administrators have now taken on the role as liquidators, and will now continue their statutory investigations into matters identified in an earlier report to creditors.
That report by FTI Consulting indicated that Mosaic Brands may have breached the Corporations Act 2001 based on its investigation so far, noting particular areas of concern include possible duty to prevent insolvent trading, failure to act in good faith and failure to keep good books and records.
The administrators’ preliminary view is that the retail group was likely insolvent as at December 31, 2020 and remained so up until it officially collapsed in 2024.
“Further investigations are required to be undertaken and consideration of any defences the directors may have available," the report read.
The directors of Mosaic Brands have reportedly advised administrators that they have sought to rely on Safe Harbour protections since April 1, 2021, and prior to this relied upon temporary relief provided during Covid-19 which, it is claimed, provided temporary relief from personal liability for insolvent trading for debts incurred during this period.
The administrators noted that, in their view, it is not clear whether the Safe Harbour eligibility criteria were met at all times and further investigation is required.
"It is also relevant to note the directors of Mosaic Brands changed through the period December 2020 to 28 October 2024. Individual directors can only be liable for debts incurred while they were in office," the report read. "Accordingly, the potential liability of each director for insolvent trading can only be referred to the period for which they were a director of Mosaic Brands, and a debt was incurred.
"At this time, the administrators reported that it is unclear as to the capacity of the directors to meet a successful insolvent trading claim and would be subject of further investigation by a liquidator, if appointed. It should be noted the companies did not have any directors and officers insurance policies in place."
The gross amount of unsecured debts incurred by Mosaic Brands which remain outstanding total around $196 million. The largest in the mix are inventory suppliers totalling 209, reportedly owed an accumulated $194.59 million.
A media report by the ABC this week noted that much of this is owed to Bangladeshi companies that employ around 40,000 workers, with many staff reportedly being sacked amid the fall-out. According to FTI Consulting’s report, the highest return possible for unsecured creditors is 17.5 cents on the dollars.
The more than 2,000 employees under Mosaic Brands will be paid their full entitlements.