Collapsed and unprofitable: Purely Byron directors may be investigated, report reveals

Two directors of collapsed skincare brand Purely Byron may be investigated for potentially breaching their duties, according to an administrator’s report, which reveals the business “co-founded” by Elsa Pataky had never been profitable.

The report into the collapse of the company, filed with the Australian Securities and Investments Commission on April 17, shows Purely Byron had been loss-making for several years, even though the brand launched its first product in June 2022.

Purely Byron, the skincare brand co-founded by model and actor Elsa Pataky and backed by husband Chris Hemsworth, was never profitable, according to a report prepared by administrators.

Between 2020 and until the skincare brand folded in March, Purely Byron’s operating losses totalled nearly $3.6 million.

Company directors Ido Leffler and Lance Howard Kalish cited the corporate troubles of majority shareholder BWX, which owned a 47 per cent stake in Purely Byron, as the driving factor behind the collapse. They deny allegations that they may have breached their duties as directors.

“BWX experienced material financial complications in the last 12 months and as a result its board declared publicly it intended to sell all of its non-core investments including Purely Byron,” the directors said in the report.

“This placed severe pressure on Purely Byron to operate during its initial brand launch.”

Australian entrepreneurs Lance Kalish and Ido Leffler in November 2015.Credit: Peter Braig

Collapsed cosmetics empire BWX slid into voluntary administration earlier this month and is in the process of selling its stake in Go-To Skincare, founded by Zoe Foster Blake, as well as e-commerce beauty retailers Nourished Life and Flora & Fauna.

Purely Byron had $4250 in the company bank account when administrators DW Advisory, whose principal Cameron Gray prepared the report, were appointed to take control of the company.

BWX, which had promised a total $8 million in funding, ultimately paid the business just under $3.9 million – less than half the promised amount. On February 23, BWX’s legal counsel sent Purely Byron’s management team an email advising they were cutting off funding.

Employees are owed $218,993, while unsecured creditors are owed more than $4.9 million. More than $91,000 of that is owed to the Australian Taxation Office.

The report showed that Purely Byron potentially traded while insolvent before the administrators were appointed, but said further investigation was needed to determine the size of any losses and that Purely Byron may not have been insolvent until BWX withdrew funding.

The report also referenced section 180 of the Corporations Act, which states company directors and officers must perform their duties with care and diligence.

The company’s working capital and total net assets were deficient by nearly $3 million across three years.

“In view of the deficiency, the directors may be in breach of this section of the act,” the report states. Determinations of any breaches of the act are a matter for liquidators.

Purely Byron entered into an “endorsement and collaboration agreement” with Elsa Pataky.

Two companies related to directors Kalish and Leffler – TTI 2 International and Zomi Consulting – are owed $99,000 each for “outstanding consulting fees”, a sum the administrator said was unlikely to be considered excessive. Both directors were paid $10,000 a month by Purely Byron for performing director duties.

In a description provided by Leffler of his duties, the company director said his responsibilities included recruiting, negotiating and securing Elsa Pataky as “key talent” for Purely Byron.

Pataky, who was referred to as a “co-founder” of the business on the Purely Byron website before it was taken down, was never a board director. Her arrangement with Purely Byron was part of an “endorsement and collaboration agreement” that engaged the Spanish model and actress’ services to promote the brand and its products.

Leffler said the report did not state that there were any delinquencies of duties by any directors or officers of the company.

“The creditors’ report accurately reflects the situation, which is unfortunate,” Leffler told The Age and Sydney Morning Herald. “We’re waiting to see what the outcome [is] of some interested parties the administrators are talking to.”

Kalish could not be reached for comment.

The Age and Sydney Morning Herald does not imply Leffler or Kalish were in breach of their director duties, but rather that they may be investigated over allegations of potential breaches.

DW Advisory will facilitate a second meeting for creditors who will likely vote to wind up the company. DW Advisory is expected to be appointed liquidator at that meeting. It is currently engaged in discussions to sell Purely Byron either as a business or for its assets.

Entrepreneurs Leffler and Kalish co-founded a natural beauty company Yes To Inc in 2006, stocked in major American retailers, as well as Yoobi, a school and office stationery business and Smiggle competitor.

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