It is estimated that Australian fashion label Dion Lee’s total liabilities were just over $35 million following a recent review by administrators after the brand collapsed in late May.
This is according to documents obtained by Ragtrader, which confirm that the administrators have recommended creditors adjourn its second meeting - which was held on June 27 - for up to 45 days to allow further negotiations or the completion of any potential sale of Dion Lee’s business and/or assets. It is unclear what the outcome of this meeting was, but no further documents have since been tabled to the Australian Securities and Investments Commission (ASIC) as of writing.
According to the administrator’s preliminary view, Dion Lee had relied on ongoing capital funding from related parties as the company was not trading profitably, including from 2022 with substantial capital injections in excess of $20 million from related parties that are both secured creditors of the collapsed brand.
“The Companies’ management indicated that the demand for the Companies’ products and the wholesale market sales have both decreased substantially causing substantial financial problems for the Companies operations.
“The above is, however, only a preliminary view as our investigations into this aspect are still ongoing.”
Amid the estimated total liabilities, secured creditors make up $29.1 million while unsecured creditors make up around $5.6 million, with $365,555 towards employees.
Meanwhile, the brand’s total assets reportedly amount to $11,743,304, including $7,123,150 in inventory, $2,960,547 in plant and equipment and $1,460,668 of cash in bank.
Another review of Dion Lee’s management accounts as at the date of the administrator’s appointment revealed associated entity debts totalling $22,394,163.25.
From May 22 to June 14, Dion Lee had continued trading, accruing $286,590.80 in revenue. The brand is still trading online, with promotions of up to 80 per cent off RRP. The brand’s store sales from May 23 to June 18 totalled just over $1 million.
As of the date of the administrator’s appointment, Dion Lee had 67 staff, including 26 full time, 38 casual and 3 part time. Over several staff have since exited the business.
Based on the claims known to the administrators, they revealed that unsecured creditors include approximately $5.3 million in unrelated trade creditors, approximately $533,000 to the Australian Taxation Office, and related creditors of approximately $1.4 million for which it holds a warehousemen lien.
The largest unrelated unsecured creditor of the Dion Lee is TwentyFourSeven SRL with an outstanding debt of approximately $707,000.
Dion Lee went into administration with six flagship stores in Australia and an international flagship store in Miami's Design District which was opened this year in January. The brand also sells globally in over 80 retailers including Net-A-Porter, Selfridges and Lane Crawford.
In 2013, Cue Clothing Co. acquired a shareholding stake in Dion Lee as part of a strategic partnership to develop and accelerate the brand's domestic and international growth.