Vaughan Strawbridge.
If Federal Court judge Cameron Moore decides Vaughan Strawbridge should be removed as liquidator of the Mosaic Brands group (Mosaic) then the 4.6 pre-appointment hours Strawbridge recorded on Mosaic back in 2020 will be deeply regretted.
This week Justice Moore heard an application brought by Mosaic creditor Shaoxing Newtex Imp & Exp Co Ltd (Shaoxing) which is seeking to have Strawbridge and his three co-appointees from FTI Consulting removed.
Shaoxing, which the court heard is owed $23 million, believes Strawbridge is incurably conflicted in relation to his pre-appointment involvement with Mosaic in early 2020 while still a partner at Deloitte.
Counsel for Shaoxing Marcus Pesman SC argued this week that Strawbridge also failed to properly discharge his duties as meeting chairman at the July 1 2025 second meeting of Mosaic creditors by not mentioning certain issues prior to voting on the removal resolution and by declining to use his casting in support of the removal resolution when the vote was deadlocked.
During his cross examination on Monday Strawbridge admitted the conduct of the meeting was marred by certain procedural irregularities but his counsel Robert Dick SC told Justice Moore his client had done nothing wrong and any inconsistencies could be “cured” without removing Strawbridge and colleagues Kate Warwick, Kathryn Evans and David McGrath.
Also under attack is Strawbridge’s treatment of employee creditor claims for the purposes of voting and his application of those claims in accordance with a deed of cross guarantee (DXG) at a time when Mosaic’s almost 3,000 workers were contracted to Noni B Holdings Pty Ltd.
Much of the early questioning on Monday focussed on Strawbridge’s attendance at three Mosaic board meetings in late March and early April 2020, just as the COVID lockdowns and moratorium on insolvent trading were coming into effect.
This was when Strawbridge was still a partner at Deloitte and his attendance at the meetings followed the entry by Deloitte on March 26 into a retainer agreement with Hamilton Locke, the Mosaic board and management’s advisors.
Much was made by Pesman of the inappropriateness of Strawbridge, if he rationed as liquidator, pursuing claims against Deloitte and Hamilton Locke in his capacity as liquidator of Mosaic, given his pre-appointment involvement, even if records produced to the court indicated that Strawbridge recorded only 4.6 hours in respect of that work.
Notices to produce issued by the plaintiff’s lawyers ERA Legal yielded various tidbits, among which was a letter then chief people officer Scott Walker sent to Mosaic employees ahead of the second meeting.
The court heard that in the letter Walker told staff in his view replacing the incumbent appointees would add to costs of the administration and delay payment.
However the Federal Government announced in February 2025 that employees would get early access to the FEG Scheme and Justice Moore appeared to give some weight to Pesman’s point that employees admitted to vote at the second meeting may have been misled.
iNO does not suggest that Walker, who left Mosaic in March this year, did so intentionally.
Pesman also told the court at the outset of his address that in the wake of the True Employer question resolved by NSW Supreme Court judge Ashley Black last week, the group’s receivers would be able to apply some of the more than $200 million recovered from the sale of Mosaic Group inventory to the claims of the Commonwealth, which takes over the employees priority claims having paid out Mosaic workers through the FEG Scheme.
In those circumstances the plaintiff could requisition a meeting to vote on the replacement resolution without there being any employee creditor opposition.
Waiting in the wings to replace Strawbridge and his FTI colleagues is Wexted Advisors’ Andrew McCabe, Joe Hayes and Jessie Wang. McCabe spent both days at the hearing, sitting in the public gallery taking notes.
Pesman told the court that Team Wexted have $300,000 in funding from Clover Risk Funding, conditional on ERA being retained to assist McCabe, Hayes and Wang in conducting investigations into potential claims against the Mosaic board of directors and potentially Hamilton Locke and Deloitte.
The court heard that Strawbridge and his team had identified a strong prima facie case for an insolvent trading claim against Mosaic’s directors given the likelihood the group was insolvent before the imposition of the moratorium in early 2020.
Dick SC countered by reminding the judge that the incumbent liquidators have commitments for almost $10 million in litigation funding.
Coincidentally, Clover Risk founder Neil Cussen is also a principal at Olvera Advisors, and Olvera founder Damien Hodgkinson is the director Best Markets Pty Ltd, the buyer of SurfStitch, another troubled retailer linked to several of Mosaic’s directors.
SurfStitch was placed into administration on June 6, shortly after its sale to Best Markets with Mackay Goodwin’s Edwin Narayan and Domenic Calabretta receiving the referral, according to their DIRRI, from Olvera Advisors. It has since returned to the control of Hodgkinson after the effectuation of a DoCA.
Justice Moore yesterday told the parties they may be required to return before him for case management prior to judgment.
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