The directors and former leadership of the collapsed fashion group Mosaic Brands have lost their claim to legal privilege over secret restructuring advice, allowing special purpose liquidators to scrutinise their actions under oath. 

The owner of Noni B, Rivers, Katies, Rockmans, Millers, Autograph, Beme, Crossroads, and W Lane entered voluntary administration in October, 2024, before collapsing into liquidation last year. 

The Federal Court separately fined the group $25 million for breaches of Australian Consumer Law, in a long-running probe into the major retailer’s demise.

Former chair Richard Facioni, former director and CEO Scott Evans, former directors Sue Morphet and Quentin Gracanin, and former CEO Erica Berchtold were among those listed as “the directors” in the Federal Court’s proceedings.

The proceedings began after the court granted the liquidators permission in May to broaden their investigation.

The investigation sought to lift the ‘Safe Harbour’ defence, which shields independent directors from civil insolvency proceedings into a company, in a bid to investigate confidential information.

The proceedings centred on whether liquidators could inspect confidential advice concerning the Safe Harbour protections. The framework can defend directors against personal insolvent trading claims if they are found to have been actively working toward a better outcome for the company, but the court ruled that the directors could no longer keep that advice hidden behind legal privilege.

Justice Markovic and the court ruled that the directors waived this privilege following a series of incidents.

These included emails and letters sent by Facioni, Berchtold and Evans, all of whom investigators sought to call upon to produce evidence that they complied with Safe Harbour regulations.

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