After a tense weekend, Australian Fashion Labels has entered in to an exclusivity arrangement with a buyer for the business’ assets.
Marcus Ayres, managing director of administrator Duff & Phelps told Inside Retail he was unable to secure a buyer for the business as a going concern, nor did he have sufficient financial resources available to him to pursue a recapitalisation.
As a result, he needed to terminate all 45 staff on Monday night.
“We worked really hard trying to get a buyer to pick up all the employees and sell this as a going concern, but it wasn’t possible for us in the tight timetable that we really needed to [make the arrangement in],” Marcus Ayres, partner at administrator Duff & Phelps, told Inside Retail.
“There’s a number of things we need to do now, but one condition [of the arrangement] is that we need to get the security released from secure creditors, and we’ll need to go through a process to do that. And that’s not a 24 hour [process], it could take quite a bit of time and was one of the reasons a going concern [sale] would not be possible.”
The fashion house, co-founded by Melanie and Dean Flintoff, operates labels BKNR, Finders Keepers, C/MEO Collective, Keepsake and The Fifth Label.
Ayres said last week that the 48 hours over the weekend would be critical to keeping the business afloat, but that it currently has effectively no working capital after the Covid-19 pandemic stalled sales.
The fashion industry was one of the worst hit sectors during the peak of the pandemic, with a majority of customers focusing on essentials to get them through lockdown and redecorating their homes to make their living spaces more inviting for long periods of time.
In November, however, clothing retail saw a 26.7 per cent spike in sales according to the Australian Bureau of Statistics – although this is admittedly coming from depressed conditions.
This article was first published by Inside Retail.