Troubled Ksubi finds buyer as liquidation looms large
Sydney Morning Herald
Wednesday February 17, 2010
FASHION is arguably best when it is a bargain. Ksubi, the Sydney-born streetwear label known as much for its jeans as the rats it once released on a runway, is poised to be bought for $5 million by a joint venture that includes one of its directors after creditors agreed to place the company in liquidation yesterday.In a deal that sports its own hip name - the K11 proposal - the founder George Gorrow, the major shareholder Harry Hodge and the Ksubi manufacturer Bleach are considered likely to buy the troubled brand today.Ksubi, the idea of Mr Gorrow and Dan Single, began trading in 2000. At its height in 2007 it turned over $19.7 million. But administrators at Grant Thornton say it was probably insolvent by January 2008 before it signed a five-year deal with the retail chain David Jones.Creditors have learnt that the Australian part of the group acted as banker to its US entities, lending $4.2 million that management now says is unlikely to be repaid in the near future due to the allegedly 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 100c in the dollar.An administrator's report says discussions between Ksubi and Bleach began early last year. 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 in the past year needs to be fully understood, the report says.A handful of creditors met yesterday and took the administrator's advice to wind up the companies. The US companies are not included.Administrators found that the company failed because of its decision to move manufacturing to the US, poor management and the global financial crisis.Ksubi owes creditors more than $9 million, including $4.28 million to Westpac. The group reported a net loss of $7 million in the 2008 financial year and $1.46 million the following year.It owed trade creditors $3.2 million in March 2008 but had reduced that to $1.9 million by last June.The Ksubi director Mr Gorrow owns 10 per cent of Bleach, according to the administrator's report.