Collapse of clothing company pushes streetwear wholesaler Stage II into retail chain, but liquidator has questions

A streetwear wholesaler which sells to Myer and David Jones has become a retailer after snapping up four Max Power stores in Victoria and Queensland just months before the business was placed into liquidation. 

Stage II, a seven-year-old business based in Geelong, says it took over four Max Power stores – in DFO shopping centres in Brisbane, Essendon, Cheltenham and South Wharf – around the end of July.

The garment supplier – which was also a creditor of Max Power – bought the fittings, fixtures and name of the retail chain.

But liquidator Paul Vartelas of B K Taylor & Co will be looking into the Stage II acquisition.

“I’ll be knocking on the door first and saying ‘I need more details’,” he told SmartCompany.

Vartelas says Stage II paid for the business by reducing the amount it was owed as a trade creditor.

But he is concerned that this deal disadvantages other creditors, as they have not been given the chance to receive money from the sale of these assets.

Aaron Pritchard, co-founder of Stage II, says he has not spoken with Vartelas about this matter.

Vartelas says up to $800,000 could be owed from the collapse of Max Power Clothing Company and stores. Creditors include suppliers, landlords and sole director John Kennedy, who had personal guarantees. Vartelas says he has been advised that all of the staff members have been paid.

Vartelas says the collapse of Max Power is primarily linked with troubles at the discount department chain DFOs, which have faced difficulties over the past few years as broader retailers slashed prices to bolster sales.

“As DFOs expanded into a new area it offered existing tenants a new spot, so they kept the same ingredients. And when one got in trouble, all the tenants got in trouble,” Vartelas says.

“When the DFOs opened up, the main point was being able to undercut other stores like DJs and Myer.”

“But over the last three or four years, the big-market retailers started an aggressive price war, and all of a sudden, DFO was just another supplier.”

“So from going well, it started going downhill very quickly.”

Max Power sells women’s and men’s clothing, including the Freshjive, Industrie and Sass brands. According to its website, it was founded in 1999.

Aaron Pritchard says after a difficult few years for the retail sector, the company sees growth in retail rather than wholesale.

Pritchard says Stage II – whose brands include All About Eve and St Goliath – will continue to sell to others retailers, but will focus its retail business in areas where it hasn’t got coverage from key majors. He declined to name a price for the deal.

The company has also opened a retail store in Hobart under a different name, Laundrie, with plans for another Laundrie store in Launceston next month. The company says it does not plan on a name change for the newly acquired stores Max Power stores in the short-term, although they could be renamed Laundrie down the track.

The Max Power Clothing Company and stores across Queensland and Victoria have entered external administration over the past few months, according to the Australian Securities and Investments Commission.