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SBS Australia
4 days ago
- Business
- SBS Australia
Shirley always wanted to run a clothing factory. She says this Australian fashion giant killed her dream
Following the collapse of Australian fashion retailer Mosaic Brands, and its much-loved labels such as Katies and Noni B, Dateline meets the suppliers who say they lost nearly everything. Watch Part Two of the two-part investigation, The Cost of Doing Business, on Tuesday 19 August at 9.30pm on SBS or live on SBS On Demand . Watch Part One now on SBS On Demand . The Cost Of Doing Business: Part 1 Shirley Lu had always adored fashion and dreamed of one day running her own factory in Shenzen, China. When she had the chance to work with Australian retail giant Mosaic Brands, she was thrilled. Mosaic owned 10 labels including Rivers, Katies, Noni B and Millers after a period of expansion between 2014 and 2018. By 2019, the company had 1,400 stores, employed 7,000 people and worked with hundreds of suppliers in Australia and overseas. "I thought Mosaic was a very famous company in Australia," she told Dateline. However in September 2023, her first invoice went unpaid. "I saw my shoes for sale on Rivers' official website but when my payment was due, no one got back to me … From September through October, I contacted them every single day by phone and email. But no one answered me." By March 2024, she says she received US$40,000 (around $62,000) after being put on a payment plan by Mosaic, but it wasn't enough to cover her expenses. "They took my goods but refused to pay. I was so miserable and broken, because I had to pay for the workers' wages." Fashion supplier Shirley Lu was initially excited to work with an Australian company the size of Mosaic Brands. Source: SBS Shirley borrowed money from her sister to cover some of her costs, but her sister was later diagnosed with breast cancer and needed the money back. "I told them, I need this money for my loved ones to survive … but they didn't reply." "We all felt that our world had come crashing down." Mosaic Brands in financial trouble The company had been reporting mostly modest profits to the ASX and in 2022, CEO Scott Evans took home a salary package of over $2 million. Noni B stores across Australia have closed down after the label's owner Mosaic Brands went into administration in October 2024. Insolvent trading is when a company is unable to pay existing debts while taking on new ones. It is illegal in Australia because of the harm it can inflict on unsuspecting businesses. However, Mosaic was using a legal protection called 'safe harbour', which enables a company to keep trading while its directors take steps to rescue the business. In recent years, the retail climate in Australia has been hit by a perfect storm of COVID-19, cost of living pressures and the rise of online shopping. This year alone, 800 Australian retailers have gone bust. According to the report to creditors, Mosaic used safe harbour protection on and off for a period of four and half years. While in safe harbour, a publicly-listed company doesn't have to disclose their insolvency to shareholders or suppliers. 'A kind of blackmail' Harry Wang also says he didn't know that Mosaic Brands was in financial trouble. He first began making shoes for Rivers from his factory in Xiamen, China, back in 2012. He says when Mosaic acquired the Australian brand in 2018, things changed. But he says it wasn't until 2022 that he stopped getting paid on time for the goods he supplied. Harry Wang says Mosaic Brands now owes him US$6.2 million (around $9.5 million). Source: SBS Harry says he felt pressured to continue to supply goods or he would face loss of sales claims or non-payment for the goods he had already supplied. "We have no choice. We'd be pushed to deliver the goods. Otherwise, we really don't have any payment … So we have to keep on supplying them," he told Dateline. "That's a trick for all the suppliers … a kind of blackmail." Harry says he was also issued with US$4.5 million (around $6.9 million) worth of loss of sales claims due to reported delivery delays or faulty goods from 2022 to 2024. Harry settled these claims at the time with Mosaic, but alleges they were excessive. He says Mosaic Brands now owes him US$6.2 million (around $9.5 million): US$4.2 million (around $6.5 million) in unpaid invoices accrued between 2022 and 2024, and US$2 million (around $3 million) in stock that he's already made, including 80,000 pairs of shoes stocked in his warehouse that may never be delivered. Harry's office staff has been reduced from 15 to four, while one of the factories he works with is in 'a state of shutdown'. Harry says the stress has placed a huge strain on his marriage and family life. "This is a very, very big lesson for all the Chinese suppliers … Don't trust anybody. That's the lesson we got," he says. "All of our wealth, after all our hard work, was suddenly wiped out by them. "I'm so sad." This is a very, very big lesson for all the Chinese suppliers … Don't trust anybody. Harry Wang Mosaic 'deeply disappointed and upset' When Mosaic entered administration in October 2024, its 10 labels and then-650 stores closed for good. Among the company's losses, Mosaic owed an estimated $US50 million (around $77 million) to suppliers in China, according to the Mosaic Brand creditor list from 8 November. Suppliers in China, Bangladesh and Australia are coming together to demand answers and call for a public inquiry into the actions of Mosaic Brands. Former Mosaic Brands CEO Scott Evans declined Dateline's request for an interview and did not provide any detailed answers to questions we put to him. Through his lawyers, he said: "Given the current circumstances of the company it is difficult ... to provide substantive comments." "Based on some of the questions and propositions that have been put to me, there seems to be material misinformation about the company, which I believe will be clarified in the fullness of time." Scott Evans when he was CEO of Noni B in 2014. Source: AAP / Dean Lewins He added that during his 10 years as CEO he "had the privilege of working alongside literally thousands of hardworking team members ...and suppliers". And that he was "deeply disappointed and upset to see Mosaic Brands enter administration". No adverse findings have been laid against any Mosaic Brands directors. 'More likely to get bitten by a shark' As the Mosaic Brands administration process unfolds, Professor Jason Harris, an insolvency expert at The University of Sydney Law School, warns that suppliers are unlikely to get any money back. Nor is the Australian Securities and Investments Commission (ASIC) likely to take action, he adds. "You're more likely to get bitten by a shark on George St in Sydney than you are to be prosecuted for insolvent training," he told Dateline. "The problem we have in Australia is there are so few cases where ASIC is taking action, or where liquidators have the funding to take action, that the bad guys out there know they're likely to get away with it. "More than 90 per cent of companies that go into liquidation give nothing to unsecured creditors. "There's all the laws we need to address this poor behaviour. What we don't have is effective enforcement of those laws." Harris adds that Mosaic Brands' use of safe harbour could be the first real test case for this law. While there is no time limit or expiry on the use of safe harbour, it relies on company directors and their advisers knowing when a business can't be saved. Harris says while it's hard to comment on Mosaic's specific situation without being across all the information, four years "stretches credulity". "If you're still having the same problems four and a half years later, then clearly it's not working... "Where were the gatekeepers?" A release issued on behalf of the Mosaic Brands board of directors last year, in response to previous reports the company had been using safe harbour protections, said its directors take their duties seriously, and did seek advice on the applicability and compliance with the safe harbour provisions. ASIC did not respond to Dateline's specific questions, but says it continues to monitor the administration of Mosaic Brands. Ongoing struggles Meanwhile, Dateline has spoken to 50 suppliers across Australia, China, Bangladesh and India who all say the way Mosaic Brands conducted business was unethical. In Shenzen, Shirley is still struggling to rebuild her life. To pay back her sister and cover her costs, she mortgaged her home. But she says Mosaic still owes her US$60,000 (around $92,000). Her dreams of growing her business and one day owning her own factory are now shattered. "I had delivered the products on time, on quality, to Mosaic," she says. "But I never imagined that they would cheat with my goods and not pay me." * Some of the debts referenced by suppliers in this story are disputed, with creditors' debts to be finalised as part of the administration process.
ABC News
30-06-2025
- Business
- ABC News
Collapse of Mosaic Brands hurts female factory workers in Bangladesh
Creditors owed more than $361 million are set to vote on the future of failed Australian retail giant Mosaic Brands, as Bangladeshi garment suppliers flag mass lay-offs as the result of millions in unpaid orders. Bangladeshi factory owner Jabed Ahmed faces debt of around $2.5 million after Mosaic, which owns Noni B, Millers and Rockmans among other brands, went into voluntary administration in October last year. He told the ABC his company, Padma Satel Arab, has had to fire around 500 workers as a result. "We are taking out loans, have had to cut some of the workers," Mr Ahmed said. "Other [suppliers] have already closed down." At least 23 factory owners in Bangladesh were owed a total of $US19.93 million ($30 million) by Mosaic when the company went under. Months later, the costs and fallout have snowballed. Mosaic's administrators FTI Consulting have recommended liquidation of Mosaic and its brands, which also include Rivers and Pretty Girl Fashion Group. More than 4,000 Australian employees from over 600 stores across the country will be paid as a priority, according to Australian law. Darren Vardy, director of Insolvency Options, which is representing the creditors, said factories and workers overseas were likely to get nothing. Under the best-case scenario outlined in the report, they will get back 17.5 per cent of what they are owed. Yet the collapse of Mosaic Brands has left a trail of devastation in Bangladesh. Factory owners have been forced to sack workers and face mounting pressure from local banks after millions in orders went unpaid. For the Bangladeshi suppliers in Mosaic's supply chain owed millions, around 40,000 workers are affected, according to a letter sent to the Bangladesh Garment Manufacturers Association. Around 80 per cent of the country's 4.4 million garment sector workers are women. FTI Consulting's initial report to creditors said Mosaic Brands had likely been trading for years while insolvent. This carries serious penalties under Australia's Corporations Act. The report also notes the company had been claiming safe harbour for trading after the pandemic. Any legal action over insolvent trading could hold some or all directors personally liable, forcing them to repay from their own pockets. FTI Consulting also raised concerns over improper financial reporting. University of Sydney law professor Jason Harris, who researches insolvency, said the case exposed serious regulatory and governance failures. "I'd also raise the question of why more wasn't made of the audit report," he said. "I thought the auditors raised serious concerns about the viability of the business several years ago." Mosaic said in August last year that consultancy firm Deloitte had been advising the company on refinancing considerations. Bangladeshi factory owner Nafis Ud Doula, from Impress Newtex Textiles, said Mosaic had strung him along with new orders. "They were tying us up with new orders just to get old payments," Mr Doula told the ABC. "They bought a lot of product from us. They kept extending payment terms — from 90 days to 120, even 180 — and still didn't pay. "They just kept saying 'don't worry, the payment is coming, just make this order,'" Mr Doula said. Mosaic Brands did not reply to the ABC's requests for comment. Former Mosaic director Scott Evans, who served from 2014 until early 2024, also did not respond to the ABC's inquiries. FTI Consulting's report showed that between 2021 and October 2024, Mosaic experienced cash flow difficulties and only recorded a surplus in one month of that period. Gazi Abdullah Al Mustafiz, merchandising manager of SMUG Sweater, is owed more than $2 million for garments already delivered or sitting idle on factory floors. In Bangladesh's garment industry, factories rely on complex financing mechanisms tied to letters of credit that are needed for international trade payments. When a brand like Mosaic places an order, suppliers buy fabric and raw materials using credit from local banks. Those banks, in turn, continue collecting repayments on loans — regardless of whether the overseas buyer pays up. "They haven't given any payment date," Mr Al Mustafiz said. "After shipping goods, we're supposed to be paid within 60 days. The bank sends reminders to the Australian bank, Commonwealth Bank — but there's no reply." The result is a spiralling debt crisis: suppliers trapped between unrelenting loan repayments and millions in unpaid invoices for goods already received by Mosaic and its companies in Australia. Safe harbour laws protect directors from personal liability for insolvent trading if certain conditions are met. Mosaic could prove a test case of Australia's safe harbour provisions, which were only introduced in 2017, Professor Harris said. Mosaic Brands invoked temporary safe harbour protections between March 25, 2020 and March 31, 2021 — introduced in response to the COVID-19 pandemic. According to the administrators, Mosaic continued to rely on safe harbour "from time to time" even after the pandemic. FTI Consulting said it was "not clear" whether the company's directors met the legal criteria for protection "at all times" and said further investigation was required. Back in Bangladesh, NRN Knitting and Garments senior merchandiser Moin Uddin is one of the worst-affected factory owners. He said more than $3 million worth of garments had been shipped to Australia without payment, while finished stock sat in his warehouse. "It doesn't just hurt factory owners … it disrupts the entire system," said Mr Uddin, whose factory employed 1,500 workers. With payments frozen, he is now struggling to pay their monthly wages. Factory owners have sent a letter to the Australian High Commission in Bangladesh about what they are owed. Mr Ahmed had planned to modernise production lines and invest more in sustainability, which he has had to put on hold. "It's not just business — it's people's lives," he said.
Yahoo
26-03-2025
- Business
- Yahoo
Australia's Jeanswest enters administration as physical stores close
Australian fashion brand Jeanswest's parent Harbour Guidance has decided to put the retailer into voluntary administration amid tough trading conditions, reduced discretionary spending and the increased cost of living. Jeanswest maintains a network of 90 stores across Australia and has a workforce exceeding 600 individuals. The closure of physical outlets is being planned while the brand's online presence and potential restructuring avenues remain under consideration. Harbour, which rescued Jeanswest after it entered administration in 2020, has appointed Lindsay Bainbridge, Andrew Yeo and David Vasudevan of Pitcher Partners Melbourne as administrators. Bainbridge remarked that despite a five-year effort to rejuvenate the 53-year-old fashion brand, it was necessary to withdraw from the physical retail market to pivot towards e-commerce strategies. He stated: 'The owners have done everything they can to keep Jeanswest going, but market conditions mean sustaining bricks-and-mortar stores is not viable and unlikely to improve. 'They deeply regret the impact of store closures on their team members and their customers, and we will be working now with teams across the country.' Bainbridge indicated that a sale of all in-store inventory would commence at once as the appointed administrators initiated the business restructuring process. He added: 'We will be opening the doors of all stores and selling online to clear all stock to secure a return to creditors.' Jeanswest's downfall comes after KPMG, the receivers of Mosaic, another retail conglomerate that operated Australian brands Rivers, Noni B and Katies, said that it would shutter all remaining Millers and Noni B stores as it failed to secure a buyer. Mosaic, which has 2,500 workers across 651 stores in Australia and New Zealand, entered administration in 2024, as reported by ABC News. "Australia's Jeanswest enters administration as physical stores close" was originally created and published by Retail Insight Network, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
