The sale of troubled denim label Ksubi is at an ‘irreversible stage’ according to the director of the company set to take control. Ksubi is poised to be bought for $5 million by a joint venture that includes one of its directors, after creditors agreed to place the company in liquidation. The deal will see Ksubi founder and Insight creative director George Gorrow, the major shareholder former Quiksilver executive Harry Hodge, and Ksubi manufacturer and Insight parent company Bleach take control of the label. Ksubi, the idea of Gorrow and Insight’s Dan Single, began trading in 2000. At its peak in 2007 Ksubi reportedly turned over $19.7 million. But administrators at Grant Thornton accounting and advisory firm say it was probably insolvent by January 2008 before it signed a five-year deal with David Jones. Creditors have learnt that the Australian part of the group acted as banker to its US entities, lending $4.2 million that management now says is unlikely to be repaid in the near future due to the allegedly limited capacity of the US operations. The sale to Bleach would secure the employment of Ksubi's 29 staff and ensure priority creditors are paid 100c in the dollar. An administrator's report says discussions between Ksubi and Bleach began early last year. Bleach took on production and manufacturing for Ksubi in July. Should the deal between the two companies fall away, the extent that the Ksubi business was ''given'' to Bleach in the past year needs to be fully understood, the report says. A handful of creditors met last week and took the administrator's advice to wind up the companies. The US companies are not included. Administrators found that the company failed because of its decision to move manufacturing to the US, poor management and the global financial crisis. Ksubi owes creditors more than $9 million, including $4.28 million to Westpac. The group reported a net loss of $7 million in the 2008 financial year and $1.46 million the following year. It owed trade creditors $3.2 million in March 2008 but had reduced that to $1.9 million by last June. George Gorrow owns 10 per cent of Bleach, according to the administrator's report.

Source: Textile and Apparel News.