‘Where are the garments?’: High-end boutique Harrolds took deposits weeks before $16 million collapse

Just weeks before luxury retailer Harrolds collapsed with debts of more than $16 million, an Italian tailor had been flown to Melbourne, a list of well-heeled clients measured for expensive suits, and deposits of 50 per cent paid.

Fashion houses in Milan, Paris, London and New York were caught off guard by the sudden collapse of the business that operated department stores in Melbourne and Sydney, which until recently sold $700 designer T-shirts and exquisite suits for up to $20,000.

Harrolds founder John Poulakis and son Ross Poulakis, the company’s director, in London in 2014.Credit: Getty Images

Some are now demanding to know what happened to their stock, or the proceeds from their sale.

“Where the f--- are the garments? What about the money? This needs to be looked at properly,” said the local agent for a European brand that had supplied Harrolds.

The agent, who asked not to be identified over concerns it could jeopardise his company’s debt recovery, accused Harrolds of continuing to import clothes until at least August and offloading them just weeks before it was placed into liquidation on October 3.

On September 16, Harrolds hosted a made-to-measure sitting at a luxury apartment on St Kilda Road and accepted deposits of more than $14,000. It had also imported about $80,000 worth of suits, sports jackets, shirts and shoes in August for clients to peruse, before they were measured.

Harrolds managing director Ross Poulakis and Jess Poon in 2022.Credit: Simon Schluter

But the stock has vanished, while the deposits were paid to a company called Nelson River International Pty Ltd, which is now in liquidation along with three other companies linked to the Harrolds Group.

The agent’s client is one of almost 90 creditors, including Versace, Balmain Paris, Tom Ford, Stella McCartney and Victoria Beckham. The Australian Tax Office is owed more than $2.3 million, while staff were not paid almost $200,000 in entitlements.

SMB Advisory was appointed as liquidator on October 3, but met with Harrolds management in May, when it determined that a “liquidation scenario was the likely path forward”.

“I confirm that my investigations into the affairs of the Harrolds Group will include whether it traded whilst insolvent and whether the liquidator has a resulting claim against the director to compensate the companies for an amount equal to the loss or damage suffered,” SMB Advisory managing principal Andrew MacNeill told this masthead.

MacNeill said he had been informed by Harrolds Company’s director Ross Poulakis that the majority of stock had been sold before liquidation during a sale conducted by a third party, with the proceeds paid into the Harrolds Group’s bank account. About 730 items remain unsold, according to MacNeill.

The liquidator said he would also examine a series of multimillion-dollar intercompany loans made between companies controlled by the Harrolds Group.

“Whilst the director estimates no recovery is expected from the related party loan accounts, I will call for the related parties to repay their respective loan accounts in full,” MacNeill said.

He said his investigation was still at a preliminary stage and creditors would be provided with a comprehensive update in a statutory report due to be filed by January 3.

Ross Poulakis, who did not respond to questions from this masthead, said in a statement released last week that the business had struggled to navigate the post-COVID retail landscape.

“Despite our best efforts to adapt to the evolving economic environment, a combination of reduced luxury spending, decreased foot traffic, unprecedentedly high levels of CBD office vacancies and extremely unfavourable government policies has significantly impacted our ability to sustain operations,” he said.

However, the demise of the fashion empire has not dimmed Poulakis’ passion for racing expensive sports cars.

In August, the 36-year-old was announced as the new driver of an Aston Martin AMR Vantage GT3 for the Sydney-based Volante Rosso Motorsport team.

Meanwhile, his father, Harrolds founder John Poulakis, has spent the past few months on an island in Greece.

John Poulakis, 66, who opened the first Harrolds store in Melbourne 39 years ago, posted images on July 25 of him dancing around a fire with an empty bottle, according to his Facebook account.

In 2018, John Poulakis pleaded guilty to assaulting his elderly parents and trashing their home, but escaped a conviction and was handed a community correction order in Heidelberg Magistrates’ Court.

He also avoided imprisonment in 2015, when he was convicted of fraud in the County Court over using false invoices to avoid $1.47 million in tax.

Judge Carolyn Douglas sentenced him to five years’ jail but ordered he be released on a five-year, $40,000 good behaviour bond.

He had used fake invoices to avoid import duties on luxury clothes imported from Europe between 2002 and 2006.

John Poulakis did not respond to questions from this masthead.

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