Fashion house behind Keepsake, Finders Keepers owes more than $10m with just $478 left in bank

The fashion house behind brands including Keepsake and Finders Keepers racked up nearly $10m in debts before its collapse, while its bank balance was whittled down to less than $500.

Steph Harrison wearing a Keepsake fitted midi dress. Picture: Brenton Edwards

The Australian fashion company behind brands including Keepsake, The Fifth Label and Finders Keepers racked up debts of more than $10m in the lead up to its recent collapse, while its bank balance was whittled down to less than $500.

Australian Fashion Group, previously known as Australian Fashion Labels, fell into administration for the second time in less than five years earlier this month, and the company’s director is making another attempt to stave off liquidation by pitching a repayment plan to creditors.

Parent company International Fashion Group is promising to inject $154,000 into Australian Fashion Group over the next 14 months, leaving unsecured creditors with a dividend of less than 13c in the dollar owed.

The biggest unsecured creditor is the Australian Taxation Office, which is owed close to $500,000, while major secured creditors include lender Judo Bank, which is owed $1.2m, and a group of related companies with common directors and shareholders owed $8.5m.

Model Ella in a Keepsake dress.

International Fashion Group is headed up by director Simon Tscharke, and its major shareholder is Mr Tscharke’s accounting firm Venture Private Advisory.

The latest report from administrator David Trim reveals that Australian Fashion Group’s day-to-day operations have been on “pause” since sometime in 2023, and suggests the company may have been trading while insolvent from “at least June 2023”.

But as part of a deed of company arrangement (DOCA) proposal, director Toby Yap is hoping to take back control of the company and revive operations with new suppliers in Southeast Asia.

According to Mr Trim’s report, Mr Yap put the company’s recent failures down to stock issues with suppliers in China, increasing operating costs and “mismanagement of the company’s assets by a former CEO”.

However Mr Trim told creditors there were other issues at play, including “poor strategic management” of the business, and trading losses resulting in a cash-flow squeeze.

The company reported a $3.5m loss in the year to June 2023, the last full year before its operations were put on hold. It had just $478 in the bank at the time of its collapse.

Mr Trim is recommending that creditors approve the DOCA when they meet on August 5.

“On the basis of the assets and liabilities position ... it is evident that a proposal for the company to execute a DOCA would allow greater funds to become available for distribution to ordinary unsecured creditors than a liquidation of the company,” his report says.

“The likely distribution to unsecured creditors is 12.73c in the dollar and it is extremely unlikely that any greater distribution would become available should the company be placed into liquidation.”

A consortium of investors calling themselves International Fashion Labels took over Adelaide-based Australian Fashion Labels from administrators in 2021, before rebranding the designer and wholesaler as Australian Fashion Group and re-launching its four brands – Keepsake, The Fifth Label, Finders Keepers and C/MEO Collective – as well as the BNKR online store.

Mr Yap called in administrators on July 9, following an earlier winding up application filed by the Australian Taxation Office.

Three other companies in the International Fashion Labels group entered payment plans with creditors late last year as part of a debt restructure, promising to return creditors a little over 12c in the dollar.

At its peak, Australian Fashion Labels generated annual sales of more than $50m, employed more than 100 people in Australia and overseas, and ran a flagship bricks and mortar store in Rundle Mall before the company’s $12m collapse during the height of Covid-19.

Mr Tscharke and Mr Yap have been contacted for comment.

Originally published as Fashion house behind Keepsake, Finders Keepers owes more than $10m with just $478 left in bank