Bargain basement price for classy jeans designer
The Age
Wednesday February 17, 2010
FASHION is arguably best when it's a bargain.Ksubi, the Sydney-based streetwear label known as much for its jeans as the rats it once released on a runway, is poised to be sold for $5 million to a joint venture that includes one of its directors, after creditors agreed to place it in liquidation yesterday.Ksubi founder George Gorrow, major shareholder Harry Hodges and manufacturer Bleach are believed ready to buy the troubled brand today.Ksubi began trading in 2000 and three years later had models jumping from the catwalk into Sydney Harbour.At its heights in 2007, it had a $19.7 million turnover.But according to administrators at Grant Thornton, it was probably insolvent by January 2008, before it signed a five-year deal with retailer David Jones.And creditors have learnt the Australian-based part of the group acted as "banker" for its US entities, lending $4.2 million that management now says is unlikely to be repaid in the near future, due to the alleged limited capacity of the US operations.The sale to Bleach would secure the employment of Ksubi's 29 staff and ensure priority creditors are paid 100 cents in the dollar.An administrators' report says discussions between Ksubi and Bleach began early last year, before Bleach took on production and manufacturing for Ksubi in July.Should the deal between the two companies fall away, the extent that the Ksubi business was "given" to Bleach over the past 12 months needed to be fully understood, the report says.Administrators found the reasons for the companies' failure were large due to its decision to move manufacturing to the US, but also included poor management and the impact of the global financial crisis.Ksubi owes creditors more than $9 million, including $4.28 million to Westpac.Mr Gorrow is a 10 per cent shareholder in Bleach.
© 2010 The Age