In response to the financial crisis, the Mosaic Brands board has entered into safe harbor arrangements, which will allow it to continue to control the fashion retailer.
The company, which is behind brands such as Noni B, Rockman, Rivers, Millers, and Katies, emerged from a brief trading suspension on Wednesday to confirm that its directors continue to take advice from its advisers.
This followed reports this week that the company had entered into safe harbor.
In a statement released to the market on Wednesday, the company noted that its directors have been taking the necessary steps to ensure that they are following the rules and regulations related to the safe harbor arrangements.
As part of its restructuring efforts, the company has been consulting with its advisers, such as Deloitte, about various refinancing options.
Through safe harbor arrangements, directors are not liable for the debts of an insolvent company.
This provides the directors with the opportunity to take the necessary steps to improve the company’s financial situation and lead it to a better outcome.
Unlike calling in a liquidator or an administrator, entering into safe harbor arrangements allows a company to address its financial distress without having to notify the market.
The company’s stock price took a hit on Wednesday after it reported weaker sales. It also faced court action for failing to meet its delivery schedules.
Although the company’s chairman and CEO, Erica Berchtold, noted that a secured creditor of the company remains supportive, it continued to work with its suppliers to deliver products to its customers.
In response to the disappointing sales, the company noted that it has been experiencing operational issues that have affected its trade.
The company noted that it is working with its advisers and its directors to resolve these issues.
It is expected that its performance will improve in the first half of its fiscal year. Mosaic operates over 700 stores across nine brands.
In June, the company released a trading update that noted that it had been experiencing operational issues during the second half of its fiscal year.
These issues were caused by its migration to a fully integrated supply chain. In the fourth quarter, the company noted that the delays in getting its products to its customers affected its earnings and revenue.
In April, the company appointed Berchtold as its new chief executive officer. She was the former head of The Iconic, a premium fashion retailer.
The company also faced legal action from the ACCC for allegedly failing to deliver its products within advertised delivery times.
The Mosaic financial year 2024 results will be released on August 28. It also has an outlook for the upcoming first quarter.