Federation Clothing in liquidation

Federation Clothing Ltd. has stores across Auckland. Photo / Facebook

Federation Clothing and a sister firm with four Auckland stores has gone into liquidation owing creditors more than $1 million.

The business, launched about 15 years ago, is still trading and being put up for sale after liquidators were appointed to Federation Clothing and Laundromat Collective by owners Jenny Joblin and Nicholas Clegg.

Federation Clothing is a wholesaler of streetwear of the same name, which is stocked by Laundromat Collective's four Auckland stores in the city centre, Newmarket, Takapuna and Onehunga.

Liquidator Peri Finnigan, in a report filed with the Companies Office today, said ASB Bank was owed just over $1 million of secured debt by Federation.

Employees of Federation were owed $2,637 in holiday and redundancy pay while workers at Laundromat were owed $11,000.

IRD is believed to be owed a total of more than $90,000 by both firms.

Unsecured creditors of both Federation and Laundromat are owed $1.71 million, though some of this is understood to be related-party debt owed by one firm to the other for stock.

New Zealand Customs seizing a large shipment of stock - and the need to borrow money to then release the clothing - was one reason for the firms' failure, Finnigan said.

"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," she said in the report.

"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 the company," she said.

Joblin and Clegg are also facing charges in the Auckland District Court alleging they filed erroneous paperwork while importing goods into New Zealand.

Other allegations include that they failed to comply with the Customs and Excise Act.

Federation Clothing was also charged by New Zealand Customs. The case is due to come back to court in April.