High-profile Australian fashion labels Marcs and David Lawrence have collapsed under debts of close to $30 million, including close to $3 million in worker entitlements and a $700,000 debt to the tax office.
The appointment of voluntary administrators to two of the country's best-known fashion brands leaves close to 1200 workers facing the the loss of their livelihoods as insolvency specialist Rodgers Reidy reviews the operation.
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Marcs, David Lawrence in voluntary administration
The companies behind fashion brands David Lawrence and Marcs have been placed in voluntary administration. Vision courtesy ABC News 24.
The chains are owned through veteran retailer and Jigsaw co-founder Malcolm Websters's M. Webster Holdings and Webster Asset in Australia and trade through 52 standalone stores in Australia and New Zealand as well as 11 outlet shops and 140 concessions in major retailers, including Myer and David Jones.
Rodgers Reidy said it was too early to discuss exactly how much the labels owed but it's understood Mr Webster is the main creditor, owed more than $12 million.
Insiders report Mr Webster has been "shopping around" the brands for the past year and invested a lot of his own money to keep the doors open as sales fell and general market conditions deteriorated.
Marcs and David Lawrence are the latest apparel brands to find themselves in hot water after kids retailer, Pumpkin Patch and Payless Shoes ran up the white flag late last year.
No buyers emerged for either of these brands and the last Payless Shoes store will close by the end of this month.
Rodgers Reidy is optimistic about the outlook for Marcs and David Lawrence, given the high profile of the brands but there will be job losses from the Australian workforce of 1130 and potential store closures, even if the administrator can successfully sew up a deal.
Rodgers Reidy said costs will need to be reviewed and staff costs were one of the "highest costs in the business."
Director Geoffrey Reidy said an outright sale was only one potential outcome from the administration.
"The alternative is for a sale and restructure of the company... and the third outcome is that we can't find a buyer and the company goes into liquidation," Mr Reidy said.
"We believe these is real potential to deal with the cost side of things, in terms of the company operation and to enable a consolidation or rationalised business, be it Marcs and or David Lawrence to be offered to a potential buyer."
Rodgers Reidy claims its too early to discuss any details of the lease liabilities associated but the insolvency specialist said getting in front of David Jones and Myer was a priority.
"We will in all likelihood consolidate and rationalise the business as our review goes forward and key to what we're looking at is having a discussion with David Jones and Myer in respect to the concession stores," Mr Reidy said.
Staff were told late on Wednesday the companies behind the brands had been placed in voluntary administration and a hunt for a buyer was underway.
The Marcs and David Lawrence stores will remain open while Rodgers Reidy runs its review and all employee wages were paid until January 30, 2017.
Mr Webster's Sydney-based company M Webster Holdings bought David Lawrence from Truworth Ltd South Africa Group in 2000 and four years later took the womenswear brand to New Zealand.
In 2006, Webster Holdings bought womenswear and menswear label Marcs from upmarket fashion retailer Oroton.
The Webster Holdings website says the company was working to expand the number of David Lawrence standalone stores and department store concessions, as well expand into "other territories".
Mr Webster has long been involved in the retail world, having co-founded British fashion label Jigsaw with John Robinson in 1972.
Mr Webster brought Jigsaw to Australia in the early 1990s but the label's UK parent company took back control of the business in 2016.
Mr Webster was contacted for comment.
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