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Clothing giant Mosaic Brands in voluntary administration, owing $250m

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A major Australian clothing group is in voluntary administration with debts of nearly $250 million.

Australian clothing giant Mosaic Brands has gone bankrupt, owing nearly $250 million.

The company went into voluntary administration on October 28 and the latest report from the external administrators shows a long list of creditors.

KPMG has been appointed as receivers and managers and is considering a sale of the business.

More than 300 employees are owed wages, but the exact amount is unknown.

Mosaic is in debt to 23 garment factories in Bangladesh, with more than $30 million owed. Workers, who are paid just a few hundred dollars a month, told the ABC they worry about feeding their families.

Prior to entering bankruptcy proceedings, Mosaic announced it would close its entities Autograph, BeMe, Crossroads, Rockmans and W.Lane.

Clothing giant Mosaic Brands enters voluntary administration with $250 million in debt

The future of Mosaic’s brands, including Noni B, is uncertain. Image credit: Supplied

The closures were intended to pave the way for more investment in other brands including Katies, Millers, Noni B and Rivers. In total, Mosaic Brands has more than 700 stores and 10 online stores.

But a filing to the Australian Stock Exchange in October revealed the restructuring had failed.

“Following the company’s recent attempts to informally restructure its business, the Mosaic board has determined that voluntary administration is the most appropriate way to restructure the group at this time.”

Clothing giant Mosaic Brands enters voluntary administration with $250 million in debt

List of Mosaic Brand’s creditors. Image source: FTI Consulting

The ASX announcement said the vast majority of secured lenders, suppliers, service providers, landlords and the Australian Competition and Consumer Commission supported the restructuring, but a minority rejected the proposal and Mosaic was unable to reach a “commercially acceptable solution” with the consumer regulator.

Mosaic Group will continue to operate as it develops its wider restructuring plans and focuses on the “critical Christmas and holiday trading period”.

The announcement continued: “The Board wishes to reaffirm to those who have supported the restructuring, Mosaic’s customers and, most importantly, Mosaic’s dedicated team across Australia, our belief that the Company has a long-term future.

Clothing giant Mosaic Brands enters voluntary administration with $250 million in debt

Employees at Hydroxide Knitwear, a supplier to Mosaic. The Bangladeshi clothing company is owed about $30 million. Image: Facebook

Mosaic Brands Limited owes about $249 million to 171 creditors, though that figure could change as administrators pore over the books.

The administrators report that KPMG has more than a dozen buyers interested in the business. The administrators believe some staff can be redeployed and “expect that the welfare of staff will be fully met”.

The Bangladesh Garment Manufacturers and Exporters Association told the ABC that Mosaic’s actions set a bad precedent for the industry.

A spokesman for the association told the ABC it had written to the Australian High Commission about Mosaic’s non-payment and had been asked to seek independent legal advice.

Oxfam Australia said the business closures highlighted systemic inequalities.

“These workers are already on the poverty wage of around $6 a day, the minimum wage,” Sarah Rogan, head of campaigns at Oxfam Australia, told the ABC.

“For Mosaic not to pay for completed orders means they are effectively working for free.”

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