The co-founder of streetwear fashion brand Ksubi has been banned from managing a company or being a director for three years by ASIC, after his company behind the label was placed in administration in early 2010.
It is the latest blow for co-founder Dan Single since the Ksubi administration commenced three years ago.
The Australian Securities and Investments Commission says the reason for Single’s banning is because he has been a director of multiple collapsed companies and he’s been unable to pay back creditors to the rate of 50 cents in the dollar.
The March 2013 creditors’ report reveals the administrators from Grant Thornton believed the company had traded while insolvent from January 2009.
Liquidator Paul Billingham is believed to have issued Single and one of the other co-founders, George Gorrow, with a $3 million trading while insolvent claim for debts which were incurred from 2009 to 2010, according to The Australian.
SmartCompany contacted Billingham, but received no further comment.
In September 2009, Gorrow and Single were both listed on BRW‘s Young Rich list, valued at $24 million.
The creditors’ report reveals unsecured creditors are owed over $4.1 million dollars and funds raised through the sale of the business are unlikely to cover this debt.
Ksubi, founded in 2000, collapsed in 2009 with debts of over $8 million, but was bought by Bleach Group and it continues to trade under this name.
At the time of the administration, the brand had two Australian stores and a shop in New York. It was also well-known for extravagant runway shows and it quickly developed a cult following among consumers.
Chief executive of the Retail Doctor Group, Brian Walker, told SmartCompany impact fashion brands such as Ksubi often have high costs.
“There’s no doubt Ksubi made a splash in the market, but sometimes you can get a bit caught up in it all. When you create a high impact fashion brand there are lots of costs which go into continuing to create that impact.”
“Often in fashion you get these cycles of high initial sales buoyed by cult followings, but brands need to work out how to maintain this going forward,” he says.
Walker says directors of a fashion group need to have good advisors and learn how to manage risk.
“[Ksubi] had a good product and brand and image, but I’d say it was just too expensive to maintain,” he says.