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Shakuhachi liquidation shows almost $1 million owed to creditors

Lucy Cormack
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A scroll through the Instagram profile of Australian fashion designer Jessica White reveals a charmed life in sunny Bali, replete with cocktails, waterfront parties and an enviable wardrobe.

But back home things aren't so sunny for more than 80 creditors to her company who remain empty-handed since Ms White left Australia potentially owing almost $1 million dollars and facing possible investigation for trading while insolvent.

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The dress that never came

Nikki wanted the perfect dress for a friend's wedding last December. So to be safe, she placed her order for a dress by Australian label Shakuhachi more than a month early. It never arrived.

Ms White is the founder and former director of the Australian fashion label Shakuhachi, which was listed on the NSW Fair Trading Complaints Register in January.

A recent Fairfax Media report detailed a wide consumer backlash against the brand, largely for late and undelivered orders.

But shoppers may be unaware that the business of Shakuhachi has been sold, and a voluntary liquidation of the former company under Ms White is taking place.

In May 2015 the former Shakuhachi Limited was placed under voluntary administration, after which Andrew Spring of forensic accounting firm Jirsch Sutherland was appointed liquidator.

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Mr Spring's report to the company's creditors, who include manufacturers, modelling agencies and Woollahra Municipal Council, sets the total amount owed to creditors at more than $860,000.

According to Mr Spring's analysis of the company books and records, Ms White also personally owes the company $634,034.

Mr Spring's report says Ms White's solicitor has previously disputed the debt, but has failed to provide him with a statement of her personal assets.

"I have been advised that [she] has moved to Bali, Indonesia, and I anticipate there may be an issue with serving a statement of claim on her. My investigations in this regard are ongoing."

Mr Spring has estimated any insolvent trading claim against Ms White would be at least $476,397.

He is conducting traces on $58,000 in money transfers listed in the company's bank statements as "Bali transfers," but remain otherwise unexplained.

In order to continue the investigation, Mr Spring requires funding from creditors of $20,000 to $40,000.

In the interim, he said he has identified any potential breaches of director duties in a confidential report to the Australian Securities and Investment Commission.

Ms White declined to answer Fairfax Media's questions, citing "ongoing legal matters," however in a statement she said her personal finances were "not a concern for Shakuhachi".

"I can confirm and assure your readers that I am taking any allegations made against me (which are not admitted) very seriously."

Ms White said foreign investment in the brand had allowed for overseas design and manufacturing opportunities, confirming her ongoing association with the brand.

"Shakuhachi is currently working to attract new international designers ... I am excited by the prospect of working with [them]."

While the former business under Ms White is undergoing liquidation, assets such as the brand and the online store were purchased by Loft HK Limited in 2015.

Ms White also appears to be connected to the brand through Emporium Clothing Pty Ltd, an additional company of which she is the director.

All of the consumers Fairfax Media spoke with presented refund and purchase receipts that listed Emporium Clothing as the merchant.

"If they are utilising the online environment of Shakuhachi ... and invoicing out of Emporium, that goes a fair way to showing the Loft HK company and Emporium are in some way doing business together," Mr Spring told Fairfax Media.

"Certainly it doesn't sound good, when you say there is potentially $1 million of personal claims against her ... and the same business operation continues. I know a lot of creditors are aggrieved when that occurs."

Three weeks ago Ms White posted an Instagram photo, advertising new Shakuhachi "resort wear ... dropping in store and soon to be online."

Shakuhachi's store on Glenmore Road, Paddington closed in February, leaving one store in Melbourne and three in Bali.

Currently the online store (under Loft HK Limited) offers sale prices of up to 50 per cent off.

A Shakuhachi spokeswoman told Fairfax Media that an "unexpected" response to the new online store had contributed to operational difficulties and subsequent complaints.

One creditor to the former business, Mince Fashion (a Hong Kong garment manufacturer), is owed more than $24,000 by the former Shakuhachi Limited.

Mince Fashion director Wai To Wong said his relationship with the brand quickly frayed, as balance payments stopped and emails often went unanswered.

"We worked fine for about two years ... but [Ms White] always wanted more benefits. Then we stopped because we hadn't received payment for a year."

In an email sent to Mince Fashion in March 2015, Ms White said Shakuhachi had "hit a tight spot," but "things [would] be better soon."

"... We need to pay in a few weeks. I know this is a lot to ask and really hope it's OK with you as it will help us return to normal with cashflow [sic]."

Shakuhachi launched in 2007, with a solo runway debut at Australian Fashion Week.