Some described Mosaic as a “predator”. Omar Chowdhury, managing director of Bangladeshi garment manufacturer Hydroxide Knitwear, said some factory workers were on the verge of suicide.
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In a report to creditors, FTI Consulting suspected that the company may have been trading unlawfully and directors could be potentially liable for breaches of duty.
However, the liquidators said further funding was required to properly investigate and pursue these findings, which never emerged.
“Our preliminary view is the Mosaic Group was likely insolvent as at 31 December 2020 and remained so up until the time of our appointment on 28 October 2024,” FTI Consulting’s second report to creditors said.
One or more company directors may have breached their duties, including failure to exercise reasonable care and diligence, failure to act in good faith, keep proper books and records, lodge annual reports with corporate regulator ASIC, and duty to prevent insolvent trading, the report claimed.
Since late December 2020, the company had racked up about $196 million in unsecured debts. The liquidators estimate that a potential insolvency trading claim could recover between $38 million and $77 million before costs and funding.
While company directors indicated they would rely on safe harbour protections, which guard directors from personal liability for insolvent trading if they are actively taking specific steps to secure a better outcome for the company, they may not be exempt from responsibility.
“Our view is that it is not clear whether the Safe Harbour eligibility criteria were met at all times and further investigation is required,” the liquidators said.
The liquidators’ report considers the directors of the company to be Richard Facioni, David Wilshire, Quentin Gracanin and former The Iconic boss Erica Berchtold.
Facioni, who was chairman of Mosaic Brands, is also the founder and executive chairman of Alquemie Group, which operates General Pants.
The youth retailer recently fended off its second winding-up order from suppliers attempting to recoup outstanding invoices, and is currently facing a claim by a third supplier, ADT Securities, for more than $22,000 for the installation of security systems.
Alquemie Group has offloaded most of its brands, including Surfstitch, and Ginger & Smart. Alquemie’s partnership with National Geographic ended earlier this year. It has an ongoing partnership with Lego, which has 22 stores across the country, and recorded profit increases to $11 million in 2024.
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