Renowned Australian fashion designer Lee Mathews has faced a public examination in the Federal Court over the liquidation of her fashion company and restructuring of her businesses, which denied a London-based creditor more than $2.3 million.
Mathews, who has boutiques in Melbourne and Sydney along with a booming online business spruiked by A-list celebrities including Gwyneth Paltrow, was grilled in court over the collapse of her company Lee Mathews Workroom Pty Ltd in October 2021 following the transfer of her fashion business to another company called Lee Mathews Australia Pty Ltd.
Before it was placed into liquidation, Lee Mathews Workroom was being pursued over a debt owed to UK fashion company Paper Mache Tiger, which was founded by former Melbourne businessman Kyle Robinson.
In November 2021, Paper Mache Tiger obtained a court judgment in the UK of almost £1.2 million ($2.306 million) against Mathews’ former company.
Barrister Simon Rubenstein, acting for liquidator SSB Advisory, repeatedly asked Mathews in the Federal Court if the restructuring of her fashion empire was a ploy to “judgment-proof” her business and avoid the massive debt.
Mathews, a former art director at Vogue Australia before launching her eponymous label 26 years ago, told the court her accountants at William Buck Australia had decided to overhaul the business. She said their decision had no connection to the legal threats from Paper Mache Tiger.
“You need to talk to the accountants … I am not an accountant; I run a design business,” she said.
Mathews said she could not recall reading or signing a sale of assets document in June 2020, when the business was transferred between the two companies.
“I don’t really understand all this stuff, so I’m not sure if it was important to me or not.”
She said she had no idea what happened to her employees, stock or creditors during the restructure, and could not remember if any consideration was paid for the sale of the business.
Mathews also told the court she could not recall the business being valued at $2.9 million, or the transfer of $995,000 between the two companies in five separate payments between June and October 2020.
“You understand in your capacity as director you have an obligation to discharge your duties in good faith?” Rubenstein asked.
“I take advice from my chief financial officer, my accountant and other senior staff,” Mathews replied.
The pair had a series of terse exchanges during the public examination on Monday and Tuesday, when Mathews repeatedly asked about the relevance of Rubenstein’s questions.
At one point, Federal Court Registrar Michael Gronow, KC, was forced to intervene.
“Ms Mathews, it’s not your job to determine the relevance or otherwise,” Gronow said.
The public examination will continue on April 22, when accountant Nick Kenny from William Buck Australia will continue to provide evidence to the court.
Liquidator Bruno Secatore from SSB Advisory will use information provided during the examination to determine if he will pursue further action against Lee Mathews Workroom Pty Ltd on behalf of creditors, including Paper Mache Tiger.
Secatore previously raised concerns about the former company in a statutory report to creditors in February 2025.
“There appears to be various payments made to the director and/or related parties that warrant further investigations, including the sale of the business,” Secatore said in the report.
He also alleged Lee Mathews Workroom Pty Ltd may have traded while insolvent from June 2020 until October 2021, and raised concerns about the performance of Mathews, who was the sole director.
“My preliminary investigations indicate that the director may have breached their duties with respect to acting with due care and diligence, good faith and to not misuse their position,” he said.
Mathews, who counts Nigella Lawson as a high-profile client, operates six boutiques in Australia, including at Paddington, Avalon and Mosman in Sydney. In Melbourne, she has high-end stores in Fitzroy and Armadale.
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