After 15 years of operating, New Zealand-based clothing label and wholesaler Federation Clothing has been put into liquidation and is up for sale as of 10 February 2016. It was placed into liquidation as a result of its rising unsustainable debt surpassing $1 million.rn
Federation Clothing, is a streetwear wholesaler and clothing label of the same name that currently operates through its four Auckland stores. After 15 years in business, the company has been put up for sale by owners Jenny Joblin and Nick Clegg.
Joblin and Clegg previously appeared in Auckland District Court in December for allegedly trying to defraud customs.
Laundromat Collective Limited, Public Gallery Limited and Only Found You Limited, three companies that Federation Clothing are either working with or have previously worked with, have all also been put up for liquidation.
Liquidator Peri Finnigan’s insolvency report highlighted the financial strain that inevitably led to the liquidation of the company.
The report indicates that the clothing label’s major secured creditor is ASB Bank Limited, which Federation Clothing and Public Gallery Limited owe more than $1 million.
The debt pressure is coupled with the $379,359 that the company owes to its unsecured creditors, including $2,637 owed to employees in holiday and redundancy pay and $11,000 owed to workers at its Laundromat stores.
The liquidators report indicates that the failure of the entity was the result of a number of factors.
“These included the seizure by New Zealand Customs of a large shipment and subsequent payment to release said shipment by way of a short term loan. This loan was subsequently called up by the secured creditor,” Finnigan said in the report.
“There was also a reduction in gross profit margins due to increased competition and lower pricing in the market, plus the adverse effects of exchange rate fluctuations.
“Withdrawl of the entity’s product line from a large retail chain and its re-reinstatement at a discounted rate had adverse affects. Lastly, a number of failed improvement projects of a material amount have all contributed to the downfall of this company”.
Liquidators are in the process of realising all assets and are seeking the sale of Federation Clothing Limits. It is understood there are a number of interested parties.
The company will continue to trade but under the control of the liquidators until further notice.