Australian clothing giant Mosaic Brands has gone bankrupt and has debts of almost $250 million.
The company went into voluntary administration on October 28 and a recently released report from the external administrators shows a long list of creditors.
KPMG has been appointed as receivers and managers and wants to sell the company.
More than 300 employees are owed an undisclosed amount.
Mosaic owes 23 garment factories in Bangladesh more than $30 million. Workers earning a few hundred dollars a month told the ABC they were worried about feeding their families.
Before Mosaic went into administration, it announced it would close its Autograph, BeMe, Crossroads, Rockmans and W.Lane entities.
These closures were supposed to pave the way for more investment in the other brands Katies, Millers, Noni B and Rivers. In total, Mozaïek Brands had more than 700 stores and 10 online shops.
But an announcement to the ASX in October shows the restructuring was unsuccessful.
The future of Mozaïek’s brands, including Noni B, is uncertain. Image: supplied
“Following recent attempts by the company to informally restructure its operations, Mosaic’s board of directors has determined that voluntary administration is now the most appropriate means of restructuring the Group,” reads the ASX announcement.
The Mosaic Group will continue trading, work on a wider restructuring plan and focus on the ‘key trading period around Christmas and the festive season’.
“The board would like to reiterate its belief to those who supported the restructuring, to Mosaic’s customers and especially to Mosaic’s dedicated team across Australia, that the company has a long-term future,” the announcement continued.
Mosaic Brands Limited owes around $249 million to 171 creditors, although this number could change as administrators sort through its books.
According to the management report, KPMG has more than a dozen interested buyers for the company.
Administrators are confident that some staff can be redeployed and ‘expect to fully comply with workers’ rights’.
The Bangladesh Garment Manufacturers and Exporters Association told the ABC that Mosaic’s behavior set a bad precedent for the industry.
A spokesperson for the association told the ABC that they had written to the Australian High Commission about Mosaic’s non-payment, and the association was told to seek independent legal advice.
Staff from one of Mosaic’s suppliers, Hydroxide Knitwear. Bangladeshi clothing companies owe around $30 million. Image: Facebook
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Oxfam Australia said the business collapse exposed systemic inequality.
“These workers are already being paid pitiful wages of around $6 a day at the minimum wage,” Sarah Rogan, Oxfam Australia’s head of advocacy, told the ABC.
“If Mosaic does not pay for orders already fulfilled, it means they have essentially worked for free.”
The company is Australia’s largest women’s fashion retail group and employed more than 4,000 staff in more than 700 stores across Australia.
Gary Mortimer, a retail expert at Queensland University of Technology Business School, said Mosaic Brands made the mistake of “essentially creating multiple brands to market to the exact same audience: middle-aged and middle-class women.” .
“If you walk into a shopping center you will find at least two, if not three, of these brands all competing for the same customer and that doubles and triples the cost of doing business,” he told News Corp.
Professor Mortimer compared the overlap to what Kmart and Target – both locally owned by Wesfarmers – did, often competing with themselves.
Earlier this year, Mosaic experienced difficulties migrating to a new supply chain system and had little stock on hand for the key Mother’s Day trading period.
The company’s shares have been suspended from the ASX since September 2 due to a delay in the filing of its 2023/24 financial report, which was due in August.