Collapsed Aussie fashion label popular with A-list celebs owes $35m

The high-profile Australian fashion label dressed the likes of Taylor Swift and Dua Lipa but has recently fallen on hard times.

A high-profile Australian fashion label that collapsed a month ago owes creditors more than $35 million.

At the end of May, news.com.au reported that the Australian arm of luxury apparel brand Dion Lee Enterprise had plunged into administration.

The business, headed by eponymous fashion designer Dion Lee who grew up in Sydney, had dressed the likes of Taylor Swift and Dua Lipa.

Mr Lee, currently based in New York, founded the business in 2009 when he was just 23 by showcasing his collection at Australia Fashion Week.

Now 38, Mr Lee grew his company to have six stores in Australia and 160 outlets globally.

Dion Lee clothes were popular among some of the world’s elite. In February, the label made headlines after Taylor Swift wore a $650 crochet corset to the Super Bowl.

The appointed administrator of the bust company, Antony Resnick, of insolvency firm dVT Group, found that in recent years and months, the business had fallen on hard times and had to be propped up with $22 million in funding from sister companies.

Although Dion Lee continues to trade, stores have shut down, one of its e-commerce websites has been archived and staff have been stood down while others have been terminated.

Taylor Swift wearing a Dion Lee corset at this year’s Super Bowl. Picture: Ezra Shaw/Getty Images

Taylor Swift kissing boyfriend Travis Kelce at the Superbowl wearing a Dion Lee corset. Picture: Ezra Shaw/Getty Images

In a report to creditors submitted to Australia’s corporate regulator, ASIC, and obtained by news.com.au, the administrator, Antony Resnick, outlined the company’s staggering trail of debts.

A whopping $35 million is owed to creditors.

The bulk of that is debt owed to secured creditors, meaning they will likely recover it all.

Of that, $29.1 million is owed to secured creditors.

Around $5.1 million to $6.7 million is owed to unsecured creditors.

The largest debt owed to a single unsecured creditor comes in at more than $700,000.

Meanwhile, the Australian Taxation Office is owed $545,000 while staff are owed 368,000 from unpaid entitlements.

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Australian fashion designer Dion Lee in his Shanghai studio. Picture: James Bantone

Although the Dion Lee company continues to trade while it searches for a buyer, things look tenuous for staff left there.

There are six stores in Australia at plush retail districts, like The Strand in Sydney, the Emporium in Melbourne and James Street in Brisbane.

The administrator, Mr Resnick, said since taking over the business, he shut down a Dion Lee outlet in the David Jones at Sydney’s Elizabeth Street in the Sydney CBD.

Seven staff members were initially stood down in May but then in June, a few were re-employed. Several others have been terminated.

The administrator also put in place a “geolocation lock” for the Dion Lee website, so that anyone Australians are redirected to a clearance website while non Australians are passed on to the US URL for the business.

The Dion Lee brand went into administration in late May.

However, not all hope is lost for creditors.

The collapsed brand has assets worth an estimated $11 million, including $7.1 million in inventory, $2.9 million in plant and equipment and $1.4 million in cash left in the bank.

The administrator has delayed the next creditor meeting by 45 days hoping for a buyer.

After advertising that Dion Lee was up for sale, seven parties signed non-disclosure agreements and some of these have progressed to letters of intent.

“The second meeting of creditors saw them approve a 45 business day adjournment,” Mr Resnick said.

“This will help us run an orderly sale process with the focus remaining on saving jobs where we can and selling the business for maximum value. Talks with interested parties are progressing.”

Dion Lee is a prestige brand that has been in business for more than a decade.

It comes as a number of major retailers have been left with little choice but to shut down as interest rate rises drive Australians to tighten their purse strings.

Last year, Australian prestige clothes firm Alice McCall went into liquidation. News.com.au reported that the company owes $1 million to creditors.

News.com.au reported on another independent retailer, called Design A Space, which also collapsed as a result of the nation’s struggling retail sector.

The year before, trendy sunglasses business Soda Shades also went into administration owing $2.3 million, and just a week before, sneaker company Sneakerboy also folded with $17.2 million owed to more than 100 creditors.

Online fashion giant Missguided also had no choice but to call in administrators after failing to secure a rescue bid, with big name brands like The Iconic and Myer selling its wares prior to its collapse.

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