The popular Australian fashion brand, which collapsed a month ago, owes creditors more than $35 million.
At the end of May, news.com.au reported that the Australian branch of luxury apparel brand Dion Lee Enterprises had gone into administration.
The company, led by Sydney-raised fashion designer Dion Lee, has designed outfits for the likes of Taylor Swift and Dua Lipa.
Now based in New York, Lee launched the business in 2009, aged 23, when he showed a collection at Australian Fashion Week.
Now 38, Lee has grown the company to six stores in Australia and 160 worldwide.
Dion Lee’s clothes have been popular among the global elite, and the brand made headlines in February after Taylor Swift wore a $650 crocheted corset to the Super Bowl.
Antony Resnick, of insolvency firm dVT Group, which was appointed administrator for the bankrupt company, found that the company’s business had struggled in recent years and months and had had to be propped up by a $22 million financial bailout from a sister company.
Dion Lee remains open for business, but its stores are closed, one of its e-commerce sites has been archived, staff have been put on furlough and others have been laid off.
In a statement to creditors filed with Australia’s corporate regulator ASIC, seen by news.com.au, administrator Antony Resnick outlined the company’s massive debt trajectory.
It owes a staggering $35 million to creditors.
The majority of these amounts are owed to secured creditors and are likely to be recovered in full.
Of that amount, $29.1 million is owed to secured creditors.
The amount owed to unsecured creditors is approximately $5.1 million to $6.7 million.
The largest debt to a single unsecured creditor is more than $700,000.
Meanwhile, the Australian Taxation Office is owed $545,000 and staff are owed $368,000 in unpaid benefits.
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Dion Lee remains open while it searches for a buyer, but the situation for the employees who remain there appears precarious.
There are six stores in Australia in premium shopping destinations including The Strand in Sydney, Emporium in Melbourne and James Street in Brisbane.
Administrator Mr Resnick said since taking over the business he had closed David Jones’ Dion Lee store on Elizabeth Street in the Sydney CBD.
Seven employees were initially laid off in May, but several were rehired in June. Several others were laid off.
Administrators also implemented a “geolocation lock” on Dion Lee’s website, redirecting Australians to a clearance website and directing non-Australians to a US URL.
But all hope is not lost for creditors.
The bankrupt brand’s assets are estimated to be worth $11 million, including $7.1 million in inventory, $2.9 million in factory equipment and $1.4 million in cash in the bank.
The trustee has postponed the next creditors’ meeting for 45 days in the hope of finding a buyer.
After Dion Lee advertised that he was for sale, seven parties have signed non-disclosure agreements, with several of them even progressing to letters of intent.
“At the second meeting of creditors, a 45-business day extension was approved,” Resnick said.
“This will enable us to proceed with an orderly sale process, with a focus on preserving jobs wherever possible and selling the business for maximum value. Discussions with interested parties are ongoing.”
As rising interest rates force Australians to tighten their purse strings, many major retailers have been left with little choice but to close their doors.
Last year, Australian luxury clothing company Alice McCall filed for bankruptcy, with News.com.au reporting that the company owed $1 million to creditors.
News.com.au also reported on another independent retailer called Design A Space, which collapsed as a result of the country’s retail downturn.
The year before, trendy sunglasses retailer Soda Shades also filed for bankruptcy with $2.3 million in debt, and just a week before that, sneaker company Sneakerboy also filed for bankruptcy, owing $17.2 million to more than 100 creditors.
Online fashion giant Missguided was also unable to secure a rescue deal and was forced to call in receivership as well, with big-name brands such as The Iconic and Myer selling products through it before it went bankrupt.
Email: alex.turner-cohen@news.com.au