$367m fashion fallout: Iconic retail giant’s staggering debts exposed

Administrators sifting through the remains of an iconic retail brands collapse involving Rivers, Katies and Noni B have revealed who the massive $367m debts are owed as next steps are planned.

The former owner of iconic retail brands Rivers, Millers and Noni B could be liquidated, after it collapsed owing about a third of a billion dollars.

Retail group Mosaic Brands owned many of the women’s clothing chains in Australian shopping centres, from Millers to Noni B, Katies, Crosswords, Autograph, W. Lane. and Beme, as well as Rivers.

The ASX-listed company claimed to be the largest specialty fashion retailer in Australia, with about 1,000 stores nationally.

But the group went into voluntary administration in October last year, owing up to $367.2 million, according to documents lodged with ASIC.

An administrator’s report lodged yesterday revealed the creditors with the largest debts were inventory suppliers, with an estimated $194.5 million owed.

The retail icon went under owing a third of a billion dollars.

The stores’ landlords were owed up to an estimated $80.3 million, while other trade creditors like utility and IT providers, freight and logistics services had debts of about $41.3 million.

Employees were owed an estimated $22 million, including $6.7 million in annual leave.

Customers had also made claims for a combined $1.9 million for gift cards which hadn’t been redeemed.

Receivers took control of the companies’ day-to-day trading before selling the Millers, Noni B, Katies and Rockmans brands to clothing wholesaler Caroline K Morgan in April.

Rivers has also been sold to another buyer.

In New Zealand, receivers have ceased the local operations of Noni B.

The administrators also noted Mosaic was likely insolvent from the end of 2020.

In the months leading up its administration, multiple executives resigned, including former CEO and director Scott Evans, former director Jacqueline Frank and ex-chief financial officer Luke Softa.

The directors told administrators there had been operational issues, and historical non-payment of suppliers prior to their involvement.

Katies was among the brands owned by Mosaic Groups.

They also pointed to extensive litigation from suppliers over payment disputes and the withdrawal of funding from group’s senior secured lender.

Further, the ACCC launched legal proceedings in March last year, alleging Mosaic breached consumer law by failing to deliver several hundred thousand products to customers within the delivery timeframes advertised on its websites during September 2021 and March 2022.

Mosaic filed defences before it went into administration.

These proceedings remain on foot, and the administrators consented to them continuing in late

January 2025.

Mosaic had previously been fined $266,400 in 2021 for false representations on its websites.

In a report, administrators Vaughan Strawbridge, Kathryn Evans, Kate Warwick and David McGrath of FTI Consulting said the companies hadn’t been able to recover from significant losses in the 2020 financial year during COVID-19.

There had also been a rapid expansion through 2016 to 2019, through the acquisition of multiple brands which performed poorly under previous owners, the report said.

In respect to the women’s clothing brands, there was a “lack of differentiation” in products and target market, the administrators wrote.

“The group then embarked on a process to restructure the business but ultimately was unable to deliver on the restructuring initiatives to generate profits to avoid insolvency,” the report said.

“A significant turnaround of the business was required to deliver profits to catch up for past losses, pay creditors when they fell due and provide sufficient working capital to manage the business.”

(L-R) Former Mosaic Brands CEO Scott Evans, CEO Erica Berchtold, and director and chair Richard Facioni.

The administrators had attempted to sell the Mosaic Brands business, but wrote despite a good level of initial interest, bidders indicated concerns around future strategy and historical debts.

In a meeting next week, the administrators have recommended creditors vote to wind the companies up.

The level of returns expected for creditors after a liquidation is uncertain with ongoing litigation, the report said.

Regardless, employees are expected to receive all of the $22 million they’re owed, while the first ranking secured creditor Hilco, which refinanced the group’s lending facilities last year, is expected to receive 98 cents per dollar.

Other creditors could receive nothing, or as much as 17.5 cents per dollar.

News Corp has contacted directors David Wilshire, Richard Facioni and Quentin Gracanin for comment.