April 2023



By Bri Lee
Image of Kym Ellery dressing a model at Paris Fashion Week, 2016

Paris Fashion Week, October 4, 2016. © Lorenzo Palizzolo / Getty Images

The Sydney-based fashion label Ellery collapsed in 2019, leaving creditors owed millions, so why is the brand, now in Paris, still feted as an Australian success story?

There’s a specific pride Australia has in a homegrown talent who makes it big in Europe, and especially so when their success takes place in a creative or glamorous field. For a long time people told and retold Kimberley “Kym” Ellery’s story over and over again. She grew up in Perth, moved to Sydney at age 20, did a short fashion course at the famous London design school Central Saint Martins, worked her way up from intern to editorial at the independent Australian fashion magazine RUSSH, and then in 2007, at the age of 23, founded the company Ellery Land Pty Ltd, trading as simply “Ellery”. Kym and her father, Bruce, who provided a small starter loan, were the co-directors, and within five years the label was seeing significant success. The designs were unique among the offerings at the time, pairing retro inspiration with a modern, architectural sensibility.

The black-and-white documentary Ellery in Paris was released in 2014, and the brand made a triumphant debut on the official schedule at Paris Fashion Week in 2015, making Kym Ellery one of only three Australian designers ever to be invited by the event’s controlling body, the Féderation de la Haute Couture et de La Mode. In March of that year she was on the cover of AFR Magazine with the coverline “From the Pilbara to Paris” and, inside, British journalist Marion Hume wrote a detailed profile of the designer with the headline “Girl Most Likely”. Kym Ellery’s story, of going from “sitting in the dirt in a T-shirt” to showing in Paris, was everything the media craved. Rags to riches and a good dash of national pride, with a nod to the cultural cringe that still perceives an endorsement from somewhere in Europe as the benchmark of success. The Hume profile featured glowing quotes from the editors of Vogue Australia and Harper’s Bazaar, and Ellery had just been asked to open the 2016 Australian Fashion Week.

To her credit, Hume was not starry-eyed, and in this way her profile was a rarity among the voluminous coverage. The local media knew how much Australians loved it when one of their own made it internationally, and considered it almost sacrilegious to question their standing. Hume ran Ellery’s statements about never receiving any capital to fund the business: “Yes, my father and others have provided small loans from time to time, but today Ellery is debt-free and fully funded from working capital which continues to grow, the result of sound financial disciplines.” But alongside the praise was fact-checking, with Hume writing that “A staffer who failed to file business activity statements to the Australian Taxation Office is no longer with the company.” And a little probing:

A claim, impossible to check, is that business has doubled in each of the past two years and that more than 50 per cent of sales are from international markets. The claim that can be checked: that Ellery is the second-best selling designer brand in [Chinese retail outlet] Lane Crawford, turns out to be not quite so. The brand is one of the 10 best performing emerging designers across the group’s three Hong Kong, four China and online stores.

Kym Ellery told Hume her ambition was to build a $50 million business. Puffery is not unlawful, but a breach of contract is. Back in late 2011, Kym Ellery had signed an exclusive contract with Myer but purportedly breached it by also selling her products to David Jones. The dispute was heard in the Victorian Supreme Court for an expensive week and, on the morning Ellery was due to give evidence, the parties came to a confidential settlement. The case may have demonstrated Kym Ellery’s reluctance to be bound by commercial agreements, but the PR impact was apparently wholly positive. As reported in The Sydney Morning Herald, “A spokeswoman for Ms Ellery also noted on Tuesday that she has become the first designer to supply both department stores … She’s now looking forward to supplying both Myer and David Jones with her Spring ’13 collection entitled ‘Renegade’.” As they say in public relations, you can’t buy that kind of coverage.

After the AFR Magazine cover in 2015, Kym Ellery’s trajectory continued to skyrocket. Her relocation to Paris in 2016 included establishing what she referred to as her “baby atelier”, signalling a more luxurious if not fully haute couture expansion. A photo essay of her worldwide travels was published by The New York Times’ style magazine T in March 2017. In May, Fashion Network reported the company was apparently planning to open a New York office following “high demand from a host of stars including Rihanna, Gwyneth Paltrow and Cate Blanchett”. Ellery garments were appearing on covers around the world. It had just launched its first flagship store in Sydney. In September, Kym Ellery was named in The Business of Fashion list of 500 “people shaping the global fashion industry” for the third year in a row. In January 2018, Fashion Network reported that she had taken her “dream come true” step into the world of couture, with “a show organised at the Beaux Arts palace, as part of the official haute couture fashion week calendar”. It also reported that in Australia her company employed “some 50 personnel”.

The AFR also ran a celebratory profile of Kym Ellery in January 2018, noting that she “travels regularly to Britain, the United States, Italy, Hong Kong and China building her business”. As both designer and director of the company, Ellery was in a position to intelligently criticise the unsustainable expectation put on labels to create quarterly collections. The company had moved to making two collections each year, with Ellery saying, “It’s about creating more time; time to design and produce better product, and time for the artisans who work with me so I can give their skills and craft the respect they deserve.” While the label did not technically qualify as a haute couture house (although it was producing twice-yearly collections), Kym Ellery had “employed a team of artisans drawn from the top couture houses to work towards being accepted on the official schedule”. Ellery told AFR, “The patternmakers are working on the patterns in Paris, the embroiderers have been briefed and the glove makers are on hold.”

Back in Australia, though, as the months of 2018 ticked by, the businesses who had actually been making Ellery’s garments for years would also find themselves on hold. But for them it wasn’t a positive position, and they certainly weren’t being respected.

Husband and wife Raymond and Sally Wong run a small, family-owned clothing factory in Marrickville, Sydney, called Sadie Clothing Company. They made clothing for Ellery – dresses, blouses, jackets, coats – for more than a decade. When I visit them, I see desks piled high with bolts of fabric, racks of garments being steamed, and hear the crunch of shears through fabric over the whirr of sewing machines. We pass three or four people on the factory floor as Raymond and Sally show me to a small office up a flight of stairs. A Mandarin interpreter is booked; both say they will refer to them if they want or need to, but neither do.

I ask the Wongs to go back to the beginning of their professional relationship with the Ellery label. They say that, early on, they made the mistake of only making clothing for Ellery. “We do the one thing stupid – we believe them,” Sally tells me, “because we are not a very big factory.” According to Raymond, when the Wongs started working for Ellery the label was still small, and it would wait until it owed the Wongs $10,000 before making a payment of, say, $2000. Based upon those piecemeal payments, Raymond says that “they owed us money, but not that much”. After several years the Wongs stopped making for Ellery because of the ongoing payment delays. But when Ellery appeared to catapult to international success around 2015, they thought it was safe to start working with the label again. As Raymond says: “We saw all the magazine covers about how Ellery is showing in Paris. The orders increased … the quantity increased, and the making price is good as well, so we thought, They can spend so much money to make the production, maybe they have found a supporter or something. Now this company … look like this icon from Australia. So we were willing – maybe we’re stupid – we’re willing to help them to grow.”

On a small table in the office are a dozen framed photos of celebrities and royals wearing dresses that Sadie Clothing Company had made. None of the designs is attributed to the Wongs, of course, but Raymond describes a sense of pride in making garments: “We’re an Australian label … so we’re happy to do.”

With larger orders, Ellery quickly grew to be Sadie Clothing Company’s main customer, and soon accounted for about 50 per cent of its turnover. But the size of the debts grew quickly too. After just two seasons – about a year – of making for Ellery again the Wongs checked the figures and became “scared”.

It’s easy with hindsight to ask why the Wongs didn’t stop working for a company that owed them thirty, fifty or a hundred thousand dollars at particular points in time, but they were stuck. “I think every business, when someone becomes your major customer, they actually control your finance,” Raymond explains. “There is nothing you can do [if you have] no order. Your factory will have to stop.” Sally is gesturing in a rolling motion with her hands, which I understand to mean turnover for continuation of their manufacturing, and she says, “Everybody says, ‘Why you not stop?’ We want to stop but, you know, because they owe the money … because we use so much time training the girls in doing this work, and also we sometimes find more people, all the people come to work for you, so we can’t stop the manufacturing. We can’t say, ‘You not pay me I not do.’ Can’t! For the manufacturing, if you want the factory running good, you need more work, more work.”

By the middle of 2018, the Wongs were in an impossible position. The “rock” on one side was Ellery owing them a debt of around $100,000, and the “hard place” was staff lay-offs and their factory grinding to a halt.

At the same time, T magazine ran a profile of Kym Ellery, highlighting her abilities as a dinner-party host in Paris. “She entertains at least three nights a week at her apartment in the Marais,” T reported, and described her “ready-made sisterhood of part-time Parisian friends”. A chef travelled from the countryside to Paris to cook for the group, and Virgil Abloh, the late menswear designer for Louis Vuitton, attended too. While Ellery and her guests were enjoying roasted monkfish with beurre blanc and a rhubarb and frangipane tart, her representatives in Australia had started asking makers for in-person meetings so they could explain why the company was defaulting on payments, and make promises about coming good.

In late July 2018, Raymond received an email from Francesca Doyle, Ellery’s head of production, asking if she and general manager Omar Varts could visit the Sadie Clothing Company factory for a meeting that week. Raymond asked what the meeting would be about and Doyle said, “We just wanted to discuss the payment situation.” Raymond replied in writing that Ellery’s payments were behind, and asked if they would receive any money. Doyle replied: “This is exactly what we wanted to come and discuss with you next week because we absolutely understand this is not acceptable and would like to have a face to face chat with you.”

The Wongs had been willing to work with Ellery. They had previously come to an arrangement that Ellery would make repayments of $5000 each week until the debt was settled. Doyle’s email response to Raymond confirmed this arrangement had been made, and that Ellery had missed payments. She wrote: “Omar and I are aware of this discrepancy and whole heartedly apologies [sic].” Ellery processed one payment of $5000 and Doyle added, “And we hope next week to increase the payments but we can’t say now, I am sorry.” They confirmed they would visit the Wongs’ factory for a conversation about financial plans.

Then, a month later in August 2018, Raymond emailed again, as Ellery had missed another payment. “Is something wrong?” he asked. This time Varts replied: “We will be back on track this week with your payment.” For three weeks things looked good, with Ellery making the agreed payments, until Raymond checked the accounts and had to follow up again on August 31. In his email, Raymond pointed out that the payments the Wongs had received were “less [than] the total amount of the orders that we are doing now”. For the debt to be growing like this, Ellery must have been placing more orders and accumulating more debts than it was able or willing to pay. Raymond suggested that Ellery’s weekly payment should increase to $7000.

The email thread suggests no one replied, so Raymond wrote to Ellery again two weeks later: “I think it is the right time to review our agreement of regular payment which is not working … As you aware, the total amount that your company owe us is growing uncontrollably to reach nearly 130K which is substantially more than last year.”

With Ellery’s debt to the Wongs rising, Raymond and Sally finally made the difficult decision to give Ellery an ultimatum. In an email, Raymond said manufacturing work for Ellery would be suspended “until we come up with a satisfied solution together”. They received a phone call from Varts that same afternoon. Raymond then confirmed details of their conversation by email the next day, accepting the company’s offer to pay $15,000 in the coming days, and requesting a financial plan to schedule weekly repayments to clear Ellery’s debt of $130,000. In return, Raymond stated that they would “complete your production on hand and continue to work for your new orders after the above requirements are fulfilled”.

Varts replied, confirming the one-off payment of $15,000 and promising to “review and confirm a realistic payment plan”. A few days later, Varts offered another one-off payment of $10,000, and to increase the weekly repayments to $6000. Raymond pushed back, asking for $6500 to $7000 each week, so that repayments might outstrip the cost of new orders still coming in and actually decrease the overall debt. Then, on December 20, nominating what would later seem a fateful timeline, Varts replied, “Would you consider an increase to 6K weekly until March [2019], and then we could sit down and reassess once again?” Raymond accepted this plan, unaware of the position Ellery Land Pty Ltd would be in come March 2019.

The public-facing image of the Ellery brand at this time was still, convincingly, one of meteoric success. Just weeks before, on November 26, 2018, a photo was shared on the company’s Instagram account showing Beyoncé wearing an Ellery dress. Clothing designed by Ellery and made by manufacturers such as the Wongs was being worn by celebrities and featuring on magazine covers. The spending on marketing and content creation certainly had not slowed either. A luxurious promotional video of Kym Ellery creating campaign footage in Milan was uploaded to Instagram in December 2018.

Sally Wong describes having had a “very good relationship” with Ellery’s production manager. According to the Wongs, in early 2019 he attempted to warn them that, in the Wongs’ words, the company was “doing something suspicious”, but it was too late. Sadie Clothing Company would normally deliver finished garments to Ellery’s office, but all the pieces from the latest season were collected and taken to “another location”, a warehouse somewhere unknown to the Wongs. According to Raymond, new-season fabric worth “big money” was also taken to this location from another company that worked with Ellery. That behaviour made the Wongs believe that Ellery’s management was trying to hide the company’s assets and that it knew, at some point in time before it was announced in April 2019, that it would be winding up the company. Sally says they lost so much money on that last season in particular, it made her “very upset” to think of how garments were ordered so close in time to the closure. “They still chasing us to make so much thing, but they know they’re not going to pay us. It’s not right.”

Sally tells me that when they were making for Ellery, which owed them large debts, they suspected that Kym Ellery and her company were spending exorbitantly on other expenses. By way of example, Sally said she was shown photos of the new collection taken at a beautiful location, and asked a staff member of Ellery which hotel they’d hired for the shoot. They had replied, “No, Kym’s home. Three thousand [a week].” Sally shook her head. At that time the Wongs were struggling to remunerate their own employees. “And if you pay me two thousand I can pay the [Sadie] girls. [Ellery’s] no good.”

Raymond remembers the company having three different managers in its final few years. When he went to the Ellery offices in person in March 2019, he says there was a manager he had not dealt with before: “They try to not open the door for me. They know what’s going on, actually, he knows … I wait there until they open the door. I keep standing there outside.” When they finally talked, Raymond asked, again, for the company to pay some of its debts. “I was trying to reduce our loss… but he did nothing. All I can force him to give me [is to] re-confirm how much their company owe us.” Raymond left feeling “very very angry, because they deliberately trick us”.

In the first week of April 2019, Ellery had a massive sale. The Sydney Morning Herald reported it later as having up to 90 per cent off “never-before-seen pieces”. I asked the Wongs about this. “Everything finished, they took it,” Raymond said, explaining that all their stock had been collected in the weeks before. Sally adds that they were willing to hand over the stock because they hoped a big sale might help with cashflow. It’s normal for designers to have one or two large sales like this each year, but the timing, in hindsight, lends support to a possible link between the sale and Ellery’s financial problems. Less than two weeks later, the Wongs received the news that Ellery Land Pty Ltd was going into voluntary administration.

Sally Wong emailed Kym Ellery directly on April 16, 2019, to try to resolve the debt issue that had been running for three years. Under the subject line “Desperate letter from Sadie Clothing Company”, she described how Ellery had defaulted on the agreed weekly payments, and expressed her concerns about rumours that the company intended to move offshore. In addition she wrote:

As you understand, we are a very small factory which has very limited resources. Any loss can be fatal and cause our factory to shut down completely. We have 10 workers that service your company for the past 10 years that help you to build up your business by making high quality garments. We always put your company first as we are part of your business. However, if we cannot chase back the debt from you, more than 10 families will be suffer by losing their jobs and even more than we can imagine. The money is our hard earn money and with blood and tear. We will consider any solution that can resolve the problem and my workers and myself are desperately waiting to hear your reply.

Kym Ellery did not reply. The Wongs managed to find her personal mobile number and called her directly. According to the Wongs, Ellery told them the accountants had taken over and there was nothing she could do. Raymond recalls she said words to the effect of “ ‘Don’t make any trouble’, because at that moment she is planning to sell her label to an Italian manufacturer, or something like that.”

Whatever Kym Ellery told the Wongs on the phone led them to believe that their only chance to receive any money would be if Ellery could sell the business, and for the business to sell it had to appear to be a money-maker. If the Wongs spoke out about the years-long debts, they would be compromising the perceived value of the company. It is not clear whether or not Kym Ellery ever made genuine attempts to sell any part of the business, but comments she made to the media in the immediate aftermath of the closure announcement suggest her plan was to cauterise the Australian operations (and losses) and continue to grow overseas, retaining ownership and control. In April, after the phone call with Kym Ellery, Sally was under the impression that Ellery was going to use that final season to present a strong business case to an interested Italian manufacturer, and so the Wongs were willing to help her “to make the company look strong”. When I met with Raymond and Sally they still (incorrectly) presumed that Kym Ellery had in fact sold the company for whom Sadie Clothing Company worked.

In the July meeting and December phone call, representatives from Ellery had told the Wongs that Ellery and Sadie Clothing Company were “partners”. Sally remembers the hard work her employees put in to help build the label in its infancy, such as years ago making samples for Ellery to show overseas at short notice. “The girls, we work together [until] nine o’clock, we do all the sample. ‘Oh Sally, tomorrow we fly to Europe!’ So all the girls stay, we make all the samples. More than 18 styles… [Now it] makes me feel bad. Very.” Raymond points out that Ellery decided they were no longer “partners” when it no longer suited Ellery. “We treat them so good. But they treat us like rubbish. If they know that business no good or, in big troubles, they should not exploit us … we lose more for her [to] lose less.”

When I tell the Wongs about an article on Kym Ellery published on the Architectural Digest site in June 2021, saying that she now lived in her “dream apartment in Paris”, they laugh in a sad, rueful way.

“All this money,” Sally says.

“All our money,” Raymond adds, then he shrugs. “But they are smarter than us, you know.”

Ellery’s two Australian retail stores were closed on April 16, 2019, and the notice to wind up Ellery Land Pty Ltd was filed on April 18, 2019. Reports noted that 22 staff were officially made redundant, but the impact on makers’ and other creditors’ livelihoods was not acknowledged. At the time of liquidation, the directors of the company were Kym Ellery and her father, Bruce Ellery.

An exclusive AFR article ran on April 23, 2019. Kym Ellery said “Unfortunately, running the production out of Australia proved to be commercially unsustainable. As a result of some poor strategic decisions that were made, and the high cost of manufacturing in Australia, we have been left with no choice but to close Elleryland [sic], our production facility and Australian operations company.” The article states that a whopping 95 per cent of the brand’s customer base lived outside Australia – a claim that, as AFR journalist Marion Hume reported years earlier, is impossible to check. “I have always championed Australian manufacturing, and this decision was incredibly difficult to make,” Ellery said. “I am deeply grateful for the dedication and support of everyone involved.” As with the majority of the coverage of Ellery and the closure, the report included no information about outstanding creditors or the company’s massive debts. I could find no evidence of journalistic efforts from any outlet in 2019 to look into which dedicated supporters might be being left behind. Instead, the AFR article notes the “brutal” retail climate in Australia and, like other coverage, lists another string of glowing endorsements of the Ellery brand.

The message being sent, both explicitly and implicitly, by Kym Ellery and her company, was that the Australian arm of the business, especially the manufacturing, was too expensive to run. The public line was that Ellery could not afford to work with Australian makers, but in reality it was the makers who could not afford to work with Ellery. While operations in Australia were failing, the international and marketing image never slowed. In April 2019, British model Rosie Huntington-Whiteley was announced and marketed as the latest “Ellery Woman”, a series of inspirational and presumably expensive brand ambassadors who would be interviewed and photographed around the world in Ellery’s designs.

French business records show Kym Ellery registered a company called Ellery Paris in February 2017, following her move there in 2016. She is the sole president of this newer French company and it is wholly owned by an Australian company called Manteau, which is also controlled by Kym Ellery. The 2019 AFR article about the closure of Ellery Land Pty Ltd reported that the “Paris-based design company” would continue and the Ellery trademark would live on, and that “Ellery is in the final negotiations of appointing a new global distributor for the brand, which will also consolidate production in Europe and provide longer-term stability for the brand that is one of the best known in Australia.” Fashion Network similarly reported that “other companies within the group, including the trademark and the brand’s Paris-based design company will be unaffected by the Australian closure. In fact, the move means the firm’s operations will be relocated to Europe. It is currently in the process of appointing a new global distributor, which will consolidate production in the region.”

Records from the Australian Securities and Investments Commission (ASIC) show that in 2019 Ellery Land Pty Ltd was wholly owned by a company called The Holy Mountain Pty Ltd. The Holy Mountain has two directors, Kimberley Ellery and Bruce Ellery, and is a wholly owned subsidiary of the company called Manteau Pty Ltd (which also owns Ellery Paris). In turn, Manteau has the same two directors and is a wholly owned subsidiary of a company called Nora Gravelle Pty Ltd. It also has the same two directors, but only one owner: Kimberley Ellery. (In June 2018, Vogue reported that Ellery had recently learnt “that her ancestry includes a Huguenot woman named Nora Gravelle who fled France for Ireland four centuries ago”.) All three subsidiaries were registered in a four-day period in June 2016. At one point in time, Manteau Pty Ltd held 100 shares in Ellery Land Pty Ltd. There were also licensing agreements between Ellery Land and The Holy Mountain for the use of the Ellery trademark. In legal terms, all of these companies are referred to as “related entities” because their ownership and directors are shared and overlapping. In plain English, the situation is best described as three levels of shell companies with a single person in complete control at the top.

It is possible that at some point in time Kym Ellery intended or attempted to sell all or part of one or more of these businesses, to try to pay the debts of Ellery Land Pty Ltd. That is what the Wongs were led to believe. But if Ellery’s comments to the media reflected her intentions at the time, then she must have known (or ought to have known, as director) that Ellery Land Pty Ltd could not pay its millions of dollars of debts. Unsecured creditors including makers such as the Wongs would be the ones left to manage the financial fallout while the luxurious brand and its famous designer continued onwards and upwards.

Fu Mei Qiu, who goes by the name May, runs May Garments Australia Pty Ltd in south-western Sydney. She spoke to me over the phone through a Mandarin interpreter before I went out to meet her at her small factory. May says she started making clothes for Ellery in around 2014 or 2015. For a few years, her then husband, whose English was more advanced, would take care of the business correspondence.

May’s story is similar to the Wongs’, especially in how her company’s business relationship with Ellery soured over time. “At the beginning they would pay one month later – if I give her the product today, they will pay one month later,” May explains. “Then later on, it’s starting to delay – taking up to two months, three months, then eventually six months before they pay.” And, as they did for the Wongs, representatives of Ellery visited May in her factory in 2018. May says: “they start not paying us, so we keep asking, so the production manager and accountant come and see us, and say that ‘give them time, they will pay’, so that we will carry on working for them.”

May says her son sometimes helped her with interpreting and translation, but that when she received the paperwork from the liquidators advising her of Ellery Land Pty Ltd’s voluntary receivership in 2019, she couldn’t understand any of it.

The business records May still has include a physical book of tax invoices noting the orders received by Ellery Land Pty Ltd from October 2018 through to April 2019. May was making dozens of blouses and dresses each month, with invoice dates showing orders were being collected most weeks. Handwritten notes, likely rolling debt totals, appear on some: “$7297.40” on November 7, 2018, “$19,085” on January 7, 2019, then “$63.827.60” on February 11, 2019. May tells me that her “normal routine” with Ellery was that when they came to collect the finished garments they would also make new orders, and orders had three-week turnaround times. The last order was collected on April 2, 2019, suggesting that Ellery representatives were continuing to place orders until just weeks before announcing the voluntary administration.

The tax invoices show that, in March 2019, May Garments made 184 units of the “Deliberate Distance Cone Dress” for $55 each (meaning, with taxes, Ellery should have paid May Garments $11,132) as well as 171 units of the “Nothing Matters Mini Skirt” for $40 each (totalling $6840). The skirt would retail for $550, and the dress for $790, suggesting Ellery had more than $235,000 worth of stock. Between October 2018 and April 2019, May’s invoices show Ellery representatives collected $72,126.90 worth of work from her. With an average mark-up of 14 times the makers’ cost, that’s more than $1 million worth of retail-priced stock from this supplier alone. May was just one of approximately 10 makers in Sydney – the Wongs were another (and her largest) – and together at that stage they had just finished making large orders of the new season designs. The Wongs were owed $111,260.70. In short: weeks before closing Ellery Land Pty Ltd, its representatives collected new stock worth several million dollars from makers around Sydney.

The liquidator’s report lists May Garment’s outstanding debt as $76,089.10, suggesting May was not paid for any of her work for Ellery from at least October 2018. “I lost so much money,” she tells me. “I was sad and crying for many days. For a period of time I can’t afford to pay my loan and I can’t pay my debt, so it took time for me slowly to recover from that, and under lots of pressure.” May had approximately six staff at that time. “Because we’re running a small family factory [there were the] running costs of the business and also I have to pay my staff, so everything was affected.”

The liquidator’s interim report to the creditors from July 18, 2019, also notes that the company’s two directors, Kimberley and Bruce Ellery, provided the following comments in relation to their company’s failure: “Insufficient capital for cash flow and investment; high manufacturing costs; and poor strategic decisions.” The company’s directors are required to work with the liquidators by submitting a Report on Company Activities and Property (ROCAP). Under the columns for Kym Ellery’s ROCAP, there is only an empty dash where there should be estimates of value of both inventory and licence agreements. The liquidator’s report states that, prior to liquidation, Ellery Land Pty Ltd was in the process of selling stock with an estimated total value of $86,000. Ellery received an offer to buy the stock for $45,000. The report also states that Ellery “sold a large quantity of branded inventory on hand to a related entity”. Investigations by the liquidator indicated that this sale “was for the purpose of offsetting a loan the Company received from the related entity. We are currently corresponding with the directors regarding the details of the loan received from the related entity and the validity of the transfer of this stock.”

In other words, some time before April 2019, an unknown amount of Ellery inventory was “sold”, probably to The Holy Mountain, Manteau or Nora Greville, in order to offset a “loan” from one of those three companies to Ellery, all of which are owned or controlled by Kimberley Ellery. The liquidator’s report notes this as a “potential uncommercial transaction”. The liquidators either could not, or did not, make sufficient enquiries as to what happened to the mass of new season garments that had been ordered, made and collected in late 2018 and early 2019.

I ask May how she felt when she learnt that Ellery was closing in Australia. “I feel very sad. I wrote a letter to them telling them how hard I have been working. There’s no holiday, I work a lot of overtime. This is only a small family factory, so whenever they request it, I just work very hard and just all the time.”

No one replied to her letter.

Nathan Mattock, a partner at Marque Lawyers in Sydney, specialises in intellectual property law, licensing and protective corporate structuring. He says that it appeared as though Kym Ellery had protected herself as a company director with “a pretty common structuring position” that is not illegal. Separate companies directed by Ellery and her father – “related entities” – appear to have held the intellectual property and the operational contracts for the Ellery label in Australia. The debts and assets were siloed. In layperson’s terms, Mattock offers a saying: “You cut off the head of that company, or the body of it, so the rest of the company can effectively continue on.” In Kym Ellery’s case, that meant cutting off the “body” of the company that owed a lot of people a lot of money, and continuing with its “head”, which was the trademark that allowed her to keep designing and selling. When the liquidator arrived to assess Ellery Land Pty Ltd, there was apparently nothing of value left.

The Monthly is not suggesting there is evidence of impropriety on the part of Kym Ellery, her father or their advisers with respect to Ellery Land Pty Ltd or any companies associated with them. But there are corporate machinations of this kind that not only raise eyebrows but are indeed illegal. Speaking hypothetically, Mattock explains where directorships can be conducted against the law, including “insolvent trading”, or continuing to incur debts when current debts cannot be paid: “Where it will become illegal [is] not so much the structuring, but if you’re running this company as a director … you still have obligations as a director to act in the best interest of the company, which is not just the company but its creditors, its employees; it’s the company and all of its constituents as a whole … If this company was racking up debts, and had no ability to pay them, then there’s [the potential for] insolvent trading claims. It’s also a breach of your directors’ duties to act in good faith.”

There is also the dodgy practice of “phoenixing”. I ask Mattock to explain it in general terms. “With phoenixing, what happens is you have a business that’s going terribly, [and] just before you go into liquidation, you move all of the assets of the business into another entity.” So the new company takes possession of the money-making assets and contracts, but is free from the debts. As Mattock describes it: “It’s like, the old one dies, and lo and behold, the next day, out of the ashes, the phoenix of the new company arises.”

Mattock says the corporate regulator, ASIC, does not protect creditors from phoenixing, director misconduct or insolvent trading. “Frankly, the corporate regulator hasn’t done enough to prevent or to investigate, or deal with it. It happens. There’s so many clients I have been involved [with] who’ve been the victims of people who phoenix and they just haven’t got recourse. They make complaints to the regulator and it just goes [nowhere].” The liquidator has an obligation to report suspected insolvent trading and director misconduct to ASIC, but, as Mattock explains, “they won’t say to ASIC that it is [insolvent trading] because that’s a matter for a court to ultimately decide whether it was or wasn’t. But they will say, ‘Hey, I have a real suspicion here.’”

Records from the federal government agency that administers intellectual property rights confirm that on, April 4, 2019, a “full assignment” was requested, and on April 5 the Ellery trademark was officially transferred from Ellery Land Pty Ltd to The Holy Mountain Pty Ltd. April 4 was also the date of the “mega sale” reported by The Sydney Morning Herald, and Australian Business Register records also confirm that on this date, Holy Mountain was officially registered as an active business.

Olvera Advisors, the liquidators in charge of Ellery’s voluntary administration process, spent 20 hours preparing “creditor enquiries”, “creditor reports” and interacting with the “secured creditor” to determine their entitlements. Another 12 hours were spent in “general investigations” that included the following:

Review of further company records. Consideration of insolvent trading claim against Company directors. Assessment of position of Company regarding potential insolvent trading claim … Preparation of file note summarising potential director misconduct. Preparation of report with Australian Securities & Investments Commission (ASIC) summarising affairs of company and potential director misconduct.

I show Mattock the report and ask him whether or not the liquidator’s comments would suggest it had legitimate suspicions of director misconduct. His reply: “Correct.”

The trademark and the inventory were the only assets of value held by Ellery Land Pty Ltd, and both were moved just weeks before the company was placed into voluntary receivership. Technically the Ellery trademark was “sold” to a related company, because, according to the Ellery Land Pty Ltd director (presumably Kym Ellery) who spoke to the liquidator, money was owed between the companies. On April 16, 2019, the name of the business was changed from Ellery Land Pty Ltd to its Australian Company Number, “124 374 358 Pty Ltd”. ASIC lists the practice of renaming the company to its ACN as a “warning sign” of illegal phoenixing activity, alongside “the people involved in managing the old company control the new company” and “the directors or former directors transfer the assets from the old company to the new company for less than market value”.

The liquidators report also notes that the federal government agency Export Finance and Insurance Corporation (EFIC, now known as Export Finance Australia) was a secured creditor, meaning at some point it had lent money to or invested money in Ellery Land Pty Ltd and had a security interest in the company. Mattock explained that the directors of Ellery Land Pty Ltd must have come to some kind of agreement or settlement with EFIC safely before April 2019 because they needed to be able to “get the asset out”, meaning the trademark. “It could be a legitimate payment for the asset,” Mattock acknowledges. “But the question then is, well, what’s the asset worth? What’s the value of the name Ellery? And you can have valuers who do value stuff like that.”

Again, The Monthly is not suggesting Ellery has conducted phoenixing in its actions. But the value of the Ellery brand would be worth a fair amount to someone, and that amount could have gone to makers such as the Wongs or May, or the company’s other unsecured creditors identified by the liquidators. But in practice, unless a creditor is willing to hire lawyers and commence litigation, directors are rarely held to account for this type of misconduct. “I’m not aware of any case where ASIC has gone after someone for insolvent trading,” Mattock says. ASIC’s website explains how creditors can report directly to the Phoenix Taskforce, a cross-government body “dedicated to stamping out illegal phoenix activity”, but it also says: “If the liquidator has concerns that the company is engaging in illegal phoenix activity, they must report this to ASIC” and “We generally do not act for individuals to help them recover lost money, but we will take action where it results in a greater market impact and benefits the general public more broadly.” As Mattock notes, ASIC almost never “do anything”. ASIC’s website notes that, in the 2021–22 year, the Phoenix Taskforce recorded just five criminal convictions.

What the creditors would need to establish is that, at a certain point in time, before the company officially wound up, it had been accumulating more debts than it could repay. From the point in time of insolvency, the directors can be held personally liable for the debts accrued. Mattock says that’s difficult because “there’s so many ways of legitimately structuring your business to avoid personal liability for a failed business”. Creditors, especially small businesses, are clearly on the back foot with these rules. I ask Mattock whether a family-run business, or those who speak English as a second language, would be able to understand this area of law or access information about seeking recourse. He says it would be “impossible” for them to understand “any of this”. Based on these facts, Mattock’s view is that the directors of Ellery Land Pty Ltd “would have known that the chances of them getting action against them from any of their creditors is limited. And so they’ve gone and got the asset and the trademark, they’ve done the sale, they’ve wound down the business, left everyone else, all the creditors, without any recourse and then—’ Mattock makes a gesture I understand to mean outta-here.

When approached by The Monthly, a representative of Ellery reiterated the formal statements of regret that were published at the time of receivership, but they challenged the level of unpaid debts from that period.

The liquidator’s “end of administration return” lodged in March 2021 shows The Holy Mountain Pty Ltd was confirmed as a “secured chargeholder” and paid $171,338 in February 2021. Meanwhile, Ellery Land’s closure left a total of 194 unsecured creditors with debts totalling $2,569,738.55.

Ellery still appeared to be present and trading in Australia through 2020, presumably under The Holy Mountain Pty Ltd. In May 2020, the label took part in the “We Wear Australian” campaign, with the goal of funding “a consumer engagement program and national advertising campaign” to encourage shopping and help the industry survive the pandemic. We Wear Australian co-founder Richard Poulson said that, “By choosing to support local and purchase Australian brands, you are ensuring a thriving creative local industry will be there on the other side of this unprecedented time.” Ellery was able to participate in the promotion as an Australian company, trading on that goodwill, while being managed by its director from France and having moved its manufacturing offshore. (The liquidator’s “end of administration return” document also appears to show that Ellery Land Pty Ltd somehow received a $15,000 COVID-related “cash flow boost” from the Australian Tax Office in October 2020 despite having wound up in 2019.)

In August 2020, Ragtrader reported “Ellery makes a return to Australian fashion”, as the label was part of the launch of Showroom X, “an eCommerce platform specialising in Australian and New Zealand brands”. In November, The Australian Financial Review ran a story about a new company designed to help labels move excess inventory called The Archive Place. This “online portal for discounted luxury clothing” included Ellery garments, yet it was at this time that, according to the liquidator’s reports, Ellery Land Pty Ltd was supposedly in the process of “selling” its inventory to “a related entity”.

Through late 2019, into 2020 and onwards, there was no sense that Kym Ellery’s decision to close Ellery Land Pty Ltd with millions in debts had negatively impacted her ability to continue to operate internationally and get great coverage domestically. She was invited to the home of the Australian ambassador to France in March 2020, where she staged a photoshoot on the embassy roof with her latest designs for the Ellery Fall ’20 collection, for a woman who “drives a fast car, has a big dog and knows how to party”. Vogue Australia published a piece in April 2020 featuring her in its “Stay Home with Vogue” series during the lockdowns. In June 2021, Architectural Digest published the article that described Kym Ellery’s “dream Parisian apartment, full of natural sunlight, ornate crown molding, and a rococo painted ceiling”. In February 2021, around the time The Holy Mountain Pty Ltd received the $171,338 as a secured chargeholder, online fashion and lifestyle site Coveteur published a “closet tour” with Kym Ellery in her apartment, noting her “wardrobe full of timeless pieces and luxury treasures”.

In March 2022, a huge collaboration with Australian fashion label Witchery was launched. Broadsheet reported that the collection had been “a year in the making”. Partnerships like these are reminiscent of the arranged marriages of centuries past: a highly respected independent designer will pair with a large, commercial outfit, to the benefit of both, for different reasons. It is fair to presume that, for a brand such as Ellery, which prides itself on being the opposite of “basic”, aligning with a mainstream high-street retailer such as Witchery would only be done for sufficient remuneration.

Kym Ellery flew back to Australia to attend the launch of the Witchery x Ellery line “at a private home in Darling Point”, according to a post on Witchery’s Instagram account. All manner of celebrities and influencers gathered by the event’s giant joint-brand signage in front of a pool.

When I ask Raymond and Sally Wong how they felt when they saw the collection announced, neither can understand why, of all Australian designers Witchery could have collaborated with, it chose Kym Ellery. “She looks so happy to come back to Australia,” Sally says. “We are Aussie too! How to face the people?” Raymond had been equally incredulous: “How can she say she is a successful designer in Australia?”

Some of the media coverage of the collection mentioned the voluntary receivership in 2019, but none of it referred to the unsecured creditors, millions of dollars of debts, or lingering questions about the trademark and the stock. Kym Ellery continues to be celebrated for her designs, which are still sold using the Ellery trademark, and the “Pilbara-to-Paris” narrative still dominates media coverage of the label.

After interviewing May at her factory she asks me again, as I am leaving, if I can help her get any of her money back.

In recent years, consumer interest in ethical supply chains has skyrocketed. People want to spend their money on responsible fashion, asking #WhoMadeMyClothes and seeking assurance that the makers are receiving living wages. These questions about ethics and transparency apparently do not apply to the darling of Australian fashion. She was doing a glamorous photoshoot on the rooftop of the Australian Embassy, going home to her “dream apartment” in Paris, while garnering sympathy and funding as an “Australian designer” working hard to get through COVID. Raymond and Sally don’t have the resources needed to launch a strategic campaign for restitution. May speaks barely any English, and told me she doesn’t do business via email because she cannot use a computer. ASIC has not (and likely won’t) investigate Kym Ellery, and the makers have no way of understanding insolvency law – let alone launching litigation – without hiring expensive lawyers, which they can’t afford to do, because they’re just getting back on their feet after being wiped out by Ellery’s Australian closure.

As Kym Ellery said in the 2015 interview with AFR Magazine: “In fashion, it’s so easy to get screwed over.”

Bri Lee

Bri Lee is an award-winning author, freelance writer and legal academic. Her books are Eggshell SkullBeauty and Who Gets to be Smart.

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