Insolvent Trading Scandal: Mosaic Brands Faces $392 Million Collapse After Four Years of Hidden Debt
Mosaic Brands may have traded while insolvent for nearly four years, racking up a staggering $196 million in unpaid unsecured debt. That’s the shocking claim made by FTI Consulting, the firm appointed as external administrators for one of Australia’s largest specialty fashion groups. Their preliminary report reveals that Mosaic’s financial decline may have begun as far back as December 2020.
The fallout has rocked the Australian retail industry. Mosaic Brands, known for household names like Millers, Rivers, Autograph, Noni B, Katies, and Crossroads, entered voluntary administration in 2024. According to FTI’s estimates, the company now owes between $361 million and $392 million to a web of domestic and international creditors — including suppliers in Bangladesh, India, and China.
Under the Corporations Act, it’s illegal for companies to continue operating if they’re insolvent. Doing so can lead to personal liability for directors, especially if the debts continue mounting. FTI Consulting has estimated that potential claims for insolvent trading could range from $38 million to $77 million — which, if pursued, would be among Australia’s largest insolvency cases in history.
Safe Harbour Protections Now Under the Microscope
A key focus of the investigation is whether Mosaic’s directors lawfully relied on safe harbour protections, a legal mechanism introduced in 2017. These rules allow companies to continue trading while they restructure — but only if strict criteria are met. Mosaic reportedly activated these protections in March 2020, during the early COVID lockdowns, and continued using them through to 2024.
However, it’s unclear whether the directors maintained compliance with safe harbour requirements over time. University of Sydney Professor Jason Harris commented, “This will be the first and potentially the biggest test of this legislation.” If directors failed to meet their obligations, they may still be held personally accountable for trading while insolvent.
The board’s silence has only deepened concern. When asked about their personal financial positions, Mosaic’s directors declined to respond — a move that may weigh heavily on creditor confidence and public trust in corporate governance.
650 Stores Closed, 4,000 Jobs Lost
Mosaic’s collapse was swift and brutal. In a matter of months, over 650 physical stores were shuttered, and thousands of employees were let go. Once a juggernaut of mid-tier Australian fashion, the group’s rise came through the acquisition of struggling but recognisable brands, with an aim to consolidate and dominate retail fashion.
Instead, the company’s aggressive expansion left it financially exposed. The resignation of CEO Scott Evans and CFO Luka Softa in early 2024 — just before the administration was triggered — added fuel to fears that internal leadership knew the situation had become unsustainable.
FTI Consulting has recommended liquidation, citing that no recovery is expected for unsecured creditors unless recovery actions — including insolvent trading lawsuits — prove successful. The next creditor meeting on June 20 is set to determine Mosaic’s final outcome.
A Wake-Up Call for Corporate Australia
The Mosaic Brands case has become more than a retail story. It is a national test of corporate responsibility, insolvency law, and director accountability. The SBS Dateline program, The Cost of Doing Business, is preparing an exclusive investigation into the broader implications of the scandal.
The story sends a clear warning across the business landscape: unchecked expansion, weak governance, and delayed accountability can spell disaster — not just for companies, but for employees, suppliers, and shareholders alike.
