Creditors have ‘overwhelmingly’ voted to wind up collapsed furniture retailer Brosa one month after the company fell into voluntary administration and sold off assets to Kogan (ASX: KGN) for $1.5 million.
The decision to place the company into liquidation was recommended by KordaMentha administrators Richard Tucker and Michael Korda, who noted Brosa did not receive a deed of company arrangement (DOCA) to bail out the struggling brand.
When the Melbourne-based company fell into voluntary administration, Brosa had assets of $4.3 million and liabilities of $24.2 million.
While Kogan’s acquisition of Brosa included intellectual property, goodwill and stock, it excluded all leases and other liabilities.
Because of this agreement, only half of an estimated 5,000 unfulfilled orders - worth roughly $10 million - will be mailed out by Kogan as "allocated stock" while the remainder will likely never be sent out to customers due to Brosa's unpaid invoices to manufacturers.
While affected customers with "unallocated" stock can apply to become unsecured creditors, it is not likely they will see any cash back for their orders.
“I’m a social worker in out-of-home care. I’ve just paid a small fortune to move house, then paid a small fortune for furniture, I can’t afford new furniture and it looks unlikely I’m getting anything from Brosa, Kogan or ANZ,” one impacted customer told Business News Australia.
Another impacted customer, who also asked to remain anonymous, alleged that KordaMentha left her in the lurch without an option to receive the furniture she ordered or any sort of refund.
"They are not making any effort to get the third parties to release our furniture to us, despite being paid in full. Not only that, but nobody from any of the involved parties will speak to us. Brosa and Kogan don't have phone numbers and the only emails we get are automated," the affected customer alleged.
Founded in 2014 by David Wei and Ivan Lim, Brosa – which means ‘smile’ in Icelandic – fell into voluntary administration after sales dropped in the wake of a relaxing of COVID-19 restrictions.
The company aimed to provide luxury furniture without the mark-ups normally associated with the costs of wholesaling and importing, and also allowed designers to manufacture and sell homeware directly to consumers.
Seven years ago, the company secured $2 million from AirTree Ventures, which subsequently backed a $5 million Series B funding round that was also led by Bailador Technology Investments (ASX: BTI) and BMY Group in 2017.
Get our daily business news
Sign up to our free email news updates.