Pumpkin Patch, a children's clothing brand, closed last week and now has a dispute over the rights of its employees.
The New Zealand company admitted to being "over-indebted" and voluntarily taken over for reasons of interest. On the same day, ANZ Bank, the company's main creditor, designated Korda Mentha as the receiver.
Pumpkin Patch has 1000 employees and 117 stores in Australia. There are 43 stores and 600 employees in New Zealand.
But the complex corporate structure means that the 170 employees at Oakland's head office and distribution center may miss the payments they deserve.
Under New Zealand law, companies are required to sell inventory to pay for employee benefits, with a ceiling of S $22000 per person.
But Pumpkin Patch Originals owns stores and inventories, while head office employees are employed by Pumpkin Patch Limited, who does not own assets.
"numbness and shock turn into anger." The secretary of the union said.
But receiver Korda Mentha said such "results are not uncommon," and it is not believed that the structure of the company is intended to depend on employees' accounts.
The trade union said the retail staff did not join the trade union and could not be paid a staff member's fee. In addition, many employees also bought tens of thousands of dollars worth of equity in the company.
The company's market price fell from S $230 million in 2013 to just 10 million. Their loss last year was S $15 million.
However, there is no limit on what Australian employees are entitled to, and their rights are protected by the government if the company does not have assets.
The receiver has closed seven stores in New Zealand and is deciding whether to close Australian stores.
Pumpkin Patch, a children's clothing brand founded by Sally Synnott in 1990, started as a mail-order company, but grew rapidly, expanding to Australia in 1994 and to the world.
Ms Synnott, who went public in 2004 and is no longer on the board, still owns a 5 per cent stake.
The company owes Australian New Zealand Bank 450-50 million New Zealand dollars, the total amount owed to creditors of 80 million New Zealand dollars.
