Reason beloved furniture brand went bust

Prior to its shock collapse in August, Fenton & Fenton had two showrooms in the well-heeled suburbs of Potts Point in Sydney and Prahran in Melbourne.

The company was renowned for its eclectic designs often featured on the pages of glossy fashion and lifestyle magazines and was later acquired by Berkowitz Furniture group.

Its founder and director Lucy Fenton has remained with the business as its creative director.

Released on Tuesday evening, the statutory report prepared by Ernst & Young liquidators Adam Nikitins and Stewart McCallum found the company had been insolvent since at least March 31, 2023, after it held more liabilities than assets, including a $31,000 bill to the Australian Taxation Office, which it was unable to pay.

This was months before liquidators were appointed on August 2, 2023.

The 56-page report, seen by NCA NewsWire, also listed a number of failures that led to the business’s collapse.

This included “inadequate cash management” to meet its debts, investments in IT, marketing and staffing Fenton & Fenton couldn’t afford, and “high overhead wage costs” that were “disproportionate to the size of the business”.

Figures listed in the report show wage costs spiralled from $1.98m in the 2020-21 financial year to $4.74m in 2022-23.

Ms Fenton also directed more than $1.3m for the sale of a personal property in order to pay the business’s secured debt of $1,526,400 with NAB.

A BMW X5 Wagon, which can cost between $109,900 and $227,900, was also seized by BMW Finance after the estimated realisable value of the vehicle was “significantly lower” than the $97,497 amount owing to creditors.

Fenton & Fenton’s assets were also significantly revised downwards from initial estimates of $1,019,814 at the time the business went into administration in August to $500,000. A $13,654 2017 BMW X3 Wagon, $275,665 in inventory and $111,514 in software were included in the sale of the business to its new owners.

The report also revealed big four consulting firm Ernst & Young charged the company $693,029.50 and flagged a future bill of $100,000 for work that was yet to be complete.

It said it had to revise its original quote of $350,000 to $450,000 due to “high levels of inquiry from stakeholders” and “significant work” needed to execute the business’s sale.

Among Fenton & Fenton’s list of liabilities, the company also owed $41,090 in wages, $33,001 in superannuation, $231,228 in redundancy payments, and $269,475 for time off in lieu and payment in lieu of notice periods.

The report said Fenton & Fenton’s employees had lodged claims for their missing pay through the Department of Employment and Workplace Relation’s Fair Entitlements Guarantee scheme, with only 35 assessments completed at the time of the report’s publishing.

The report’s release also came on the eve of the company’s website relaunch, with shoppers able to purchase products from the brand.

In October, Ms Fenton released a statement apologising to “loyal customers, suppliers, artists, staff, family and friends” for the business’s collapse.

“I was not expecting the abrupt closure of the business, which was devastating for me and so many others. I also did not anticipate the opportunity to return to trading,” she said.

“For those who were let down, I understand your frustration and hear you loud and clear. I have read each and every post and will take this feedback and endless learnings into the future.”

She also thanked the Berkowitz family for “giving us the chance to work together” and said the new owners would commit to prioritising past orders and honouring outstanding gift cards “where possible”.

“As promised, this has been our focus before we reopen and will continue over the coming months,” she said.

“The past couple of months have been extremely challenging but we appreciate your patience and look forward to welcoming you back into the showroom and online very soon.”

Fenton & Fenton were approached for comment.

Originally published as Fenton & Fenton’s collapse blamed on poor cash management, high overhead wages, liquidator report reveals