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The fate of failed retailer Mosaic Group (ASX: MOZ) has been finally sealed after creditors voted to liquidate the company in a predictable epilogue to a saga that has led to the demise of some of Australia’s oldest fashion brands.
Voluntary administrators from FTI Consulting recommended that creditors wind up the company after failing to secure a deed of company arrangement (DOCA) to keep it afloat.
The administrators recommended to creditors that liquidation was the “most appropriate course of action” in the absence of a DOCA or other proposal.
The second creditors’ meeting of Mosaic Brands yesterday appointed Vaughan Strawbridge, Kathryn Evans, Kate Warwick and David McGrath, of FTI Consulting, as liquidators of the company.
The liquidators plan to continue their statutory investigations into matters identified in the report to creditors, including claims that the company may have been insolvent for years.
Mosaic Brands, which operated nine retail fashion brands comprising about 700 stores across Australia and New Zealand prior to being placed into administration in October last year, collapsed with debts of between $361 million and $392 million, according to the creditors’ report.
Store numbers had been slimmed down in recent years from a peak of about 1,400, with the company’s woes turning for the worse due to lockdowns during the pandemic.
But the collapse of the company has taken its toll on enduring retail brands which were shut down one after the other since the administrators were appointed last year.
Mosaic Brands started the ball rolling in September, announcing the closure of Rockmans, Autograph and W.Lane, which accounted for more than 200 stores, in a bid to stem its financial losses and keep the business afloat.
Rockmans had been a mainstay of the Australian fashion retail market for almost a century, founded by the Rockman brothers in 1930 in Melbourne.
The death knell was also sounded in December for Katies, a brand that traces its history back to 1956.
By January this year, administrators also announced the closure of Rivers, Millers and Noni B after potential buyers walked away. Millers was established in 1993 while Rivers, which was founded in 1979, can trace its origins as far back as 1863.
Liquidation of the company was not unexpected in light of administrators failing to secure a sale for any of the company’s iconic brands, bringing a quick end to businesses that have withstood multiple economic downturns over the decades.
The administrators, after investigating the collapse of the group, surmised that Mosaic Brands was high-cost business that lacked product differentiation and competed with itself in retail malls for the custom of "mature shoppers".
“The group expanded rapidly through the acquisition of a number of brands some of which had been performing poorly under their previous owners,” said the creditors’ report.
“In respect to the women’s clothing brands there was a lack of differentiation in this expanded brand portfolio in product offering and target market.”
Attempts to sell these iconic brands hit the wall earlier this year with several parties showing interest ultimately pulling out of deals.
The administrators said that the buyers “could not satisfy themselves as to the future strategy of the brands” while also expressing significant concerns over the “historical indebtedness” of the business and the impact that the insolvency had on the brands.
Despite liquidation, Mosaic Brands is still in the sights of the Australian Competition and Consumer Commission which is taking the company to court for alleged breaches of Australian Consumer Law.
The company is alleged to have failed to deliver several hundred thousand products to customers within the delivery timeframes advertised on its websites during September 2021 and March 2022.
It seems a pointless exercise, but the ACCC says it is proceeding on the basis of “strong public interest”.
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