AUSTRALIAN FOOD REVIEW – A children’s clothing company has been hit with a $9.7 million court judgment after its creditors accused the business of running a “fraudulent” business scheme that made money for the company.
Gerber said in a statement it was “fully committed to resolving the matter with the creditors”.
“The creditors are disappointed in the outcome and have asked for additional time to consider their options,” the statement said.
“We are committed to working through this matter and our creditors will be advised of our plans.”
The company said it would close its doors as of March 6, 2018.
The court documents filed by the creditors say the company made false claims about revenue, marketing and customer service, and failed to properly manage the company’s finances.
Gerber was launched in 2010 and became the first child’s clothing brand to make money in Australia.
But the business’s business model failed to take off, with sales dropping from $10 million to $1 million a year, and profits slipping to $400,000 a year.
Its website says it was the first children’s fashion retailer to offer child clothing to the public and that the business was the largest child clothing retailer in the world.
It said its growth was based on strong brand loyalty, “a strong customer base and the highest quality merchandise available”.
The business had also been accused of misleading consumers about its products and selling a range of clothing items to unsuspecting consumers, with a number of lawsuits being filed.
According to court documents, Gerbins advertising and promotional materials were misleading and deceptive.
“In order to make their claim, the creditors sought damages for false statements and misleading advertising, and for false representations that Gerber is an Australian-owned and operated business,” the court documents said.
They also said the company had breached consumer protection laws by misrepresenting its brands, products and service.
In the first lawsuit, the company said in an email to customers it was not a licensed clothing retailer and that customers should contact Gerber for more information.
A separate lawsuit said the claims were made through a false representation of the business and a false statement that the company did not offer child clothes.
At the time of its acquisition by Gerber in 2010, the business had $2.4 million in revenue, and it was in its last year of operation, the court papers said.