Designer sews up deal

Liz Mitchell has closed her Ponsonby store. Photo / Herald on Sunday

Top fashion design company Liz Mitchell Design Ltd has gone bust, owing creditors nearly $200,000.

But the company's director Liz Mitchell, who has made clothing for actress Keisha Castle-Hughes and multiple Academy Award winner Sir Richard Taylor, is back up and running and trying not to fall foul of Companies Act rules.

Mitchell told the Herald on Sunday another of her companies, Ruby Small Holdings, bought Liz Mitchell Design Ltd, including the well-known brand, shortly before it went into voluntary liquidation.

The liquidator's report reveals Liz Mitchell Design Ltd has no assets.

Ministry of Economic Development national enforcement manager Phil Day said yesterday his unit would gather information about the liquidation to make sure, as Mitchell believes, there had been no breach of the phoenix provision in the Companies Act.

"We need to have more information," he said.

The phoenix provision aims to stop companies avoiding debts by going into liquidation, then setting up again as a new company. One insolvency expert said a key test was when Ruby Small began trading as Liz Mitchell.

Mitchell said in an email that Ruby Small Holdings was not a phoenix company as it was formed in 2007.

The liquidation report prepared by Shepard Dunphy shows Liz Mitchell owes unnamed suppliers $103,609 and the Inland Revenue Department $95,000.

The liquidator's report said the company has suffered from a downturn in sales and orders.

"This downturn, in combination with yet-to-be-determined losses resulting from unauthorised payments by a now ex-employee, caused severe stress on the company's cashflow, as did the liquidation of a major client."

It said the business, including the Liz Mitchell brand, was sold as a going concern last month.

Voluntary liquidation was filed on August 1.

Mitchell also said her Ponsonby retail store had closed as the new company focused on its core products.

"If we want to survive we have to go forward a leaner entity until we can get back on our feet," she said. "We are quietly building new beginnings for Liz Mitchell. I've come through this stronger and hopefully wiser."

She would not have an individual show at New Zealand Fashion Week next month. "Our focus now is on creating income. Fashion Week gives you fantastic profile but the resources to do a show are just not there yet."

Mitchell said the company's focus now was the made-to-measure items and the range sold through Farmers.

Strong supplier connections in China mean she would be able to continue producing quality products but with a cheaper price tag, she said.

Mitchell was made a Member of the New Zealand Order of Merit in 2005.

Castle-Hughes wore one of her dresses when she was nominated for an Oscar and Weta Workshop's Taylor wore his Liz Mitchell Design for his red carpet appearances.

Former Prime Minister Helen Clark has also worn Liz Mitchell clothing.