Creditors have opted to liquidate Perth Fashion Festival today, just days after festival director Tony Sage failed to sell down his Perth Glory soccer club stake; while the administrators had been unable to recover a debt owed to the company by industry body the Fashion Council WA.
Creditors have opted to liquidate Perth Fashion Festival today, just days after festival director Tony Sage failed to sell down his Perth Glory soccer club stake; while the administrators had been unable to recover a debt owed to the company by industry body the Fashion Council WA.
There were 124 creditors of the festival, owed almost $1.1 million total.
The company entered voluntary administration in 2019, with last year's festival ran by Fashion Council WA.
Business News understands creditors had intended to vote on a deed of company arrangement to revive the Perth Fashion Festival entity, which ran the city’s premier fashion event for 20 years.
That deal would have involved entrepreneur Tony Sage, who was co-owner of the Perth Fashion Festival company and also owns local soccer team the Perth Glory, chipping in $200,000 through his Okewood business.
But it is understood the DOCA was withdrawn earlier this week.
It comes after a deal for Mr Sage to sell 80 per cent of the Glory to a London-based cryptocurrency exchange was cancelled on Tuesday.
A report by administrators Hall Chadwick WA released last week shows the Fashion Council had an outstanding debt of $459,166 to the festival.
That was partly for receivables, and partly for ongoing use of intellectual property, which were both covered under an IP agreement.
“FCWA has made one payment of $50,833.33 due to the company under the IP agreement with an amount of $459,166 remaining payable,” administrators Cameron Shaw and Richard Albarran, of Hall Chadwick WA, said in the report.
“Following a teleconference with board members of FCWA on 10 December 2019 it was understood that whilst FCWA acknowledged the agreement, it was their opinion that there was no longer any value in the IP.
“In light of this position, I proposed that FCWA provide the administrators with a proposal to settle the amount due.
“Further meetings were held with the FCWA board, as well as (treasurer) Martin Michalik throughout January 2020 on a without prejudice basis to outline what conditions need to be agreed as part of any settlement.
“On January 20 2020, I received an offer from FCWA for $38,500 for the receivables of the IP agreement and an offer of nil for any intellectual property which would remain with the company subject to a number of conditions.
“Given the receivables balance in the IP agreement was $205,000, I am of the opinion that the offer received is well below what would be expected in the circumstances, and rejected the offer.
“The matter currently remains unresolved and in my opinion, the debt is due and payable.”
The report also said that Mr Sage and fellow director Mariella Harvey-Hanrahan, and the Okewood entity, were creditors to the festival with claims of $476,268.
The administrators offered a clarification on an earlier statement that the company may have traded while insolvent.
“Whilst the receipt of additional books and records has not changed my opinion on the deteriorating financial position of the company, I believe the directors may have possible defences available ... as a result of new information provided to me regarding the funding available to the company under the sponsorship agreement between FCWA and various governmental bodies,” the administrators wrote.
“The directors have advised that due to the … sponsorship agreements, they were of the opinion that sponsorship funds would be available to the company.
“In this case, it would appear that they had reasonable grounds to suspect the company was solvent and would remain so, given that there were outstanding receivables expected to be paid in accordance with the agreements.”
