Stax debt twice as high as reported

The liquidators, as detailed in the creditors’ briefing today, say the collapsed activewear brand Stax was over twice as deep in debt as its books indicated. Its shortfall reached $22.82 million before liquidation expenses, far above the $10.35 million shown on the June 24, 2026 balance sheet.

CasCap Advisory partners Brian Silvia and Michael Hird revealed that Stax’s financial records up to June 24 significantly underestimated its financial shortfall. Their July 10 assessment showed a $15.77 million deficit based on book value, increasing to $21.26 million when accounting for estimated liquidation values.

Unrecorded Costs and Overstated Stock

Two key discrepancies contributed to the shortfall: inventory levels and trade creditors. The June financials overstated stock by roughly $1.75 million compared to the actual $1.185 million counted. The liquidators expressed concerns that monthly financials only accounted for online sales, neglecting in-store transactions and leaving inventory figures inflated.

Trade creditors were also underreported by $5.19 million, including $1.4 million owed to customers who prepaid for clothing through online channels. The liquidators noted that Stax had incorrectly recorded these prepayments as sales revenue rather than liabilities, even though the merchandise had not yet been delivered.

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Other adjustments included employee claims understated by $289,000, secured creditor debts understated by $270,000, and about $99,000 in additional ATO liabilities. The liquidators also said the reported loss of $693,000 for the 2026 financial year to June 24 was a material understatement.

Financial Struggles and Customer Impact

Stax last posted a profit in fiscal year 2022 but suffered a $9.12 million loss in FY2024. The company had been insolvent by at least June 30, 2024, and its collapse left around 12,000 creditors—many of whom were customers with unfulfilled orders—financially affected.

Efforts by the liquidators to fulfill a portion of those orders to minimize chargeback risks failed. Most of Stax’s remaining stock, valued at $1.185 million on the books, was stored at a Western Sydney logistics facility, where the operator claimed a lien for unpaid fees, blocking access to the inventory.

The liquidators estimated the stock could be sold for just 25 cents per dollar. Unable to resolve the lien dispute, they were restricted to selling leftover items from Stax’s Liverpool store. Paying any dividends to non-employee creditors was deemed unlikely.

The report also details a growing debt burden while the business kept losing money, with NAB owed about $7 million and short-term lender Bizcap owed $1.883 million when the liquidators were appointed. Irish lender Wayflyer had financed Stax since 2020, with the debt growing to about $9.1 million, or about $10m with interest, under terms negotiated in December 2024.

Creditors will meet virtually on October 13 for the next steps, as the assets of Stax were sold off to new owners, who are the entrepreneurs behind Australian hype e-commerce marketplace Pushas. The new investor group is independent of Pushas, which remains separately owned and operated. The liquidators’ report noted that Stax’s financial struggles were exacerbated by its inability to meet weekly repayments of $28,125 to Bizcap, which it stopped paying on March 25, 2026.

NAB’s $7 million claim stemmed largely from a trade finance loan used to import goods from China. The bank had agreed to a forbearance plan on September 24, 2025, with FTI Consulting overseeing compliance, but declared Stax in breach on March 24, 2026, followed by further default notices on May 7, May 27, and June 10.

Director’s Credit Card Facility Exhausted

The liquidators concluded that, despite valuation issues, Stax’s bookkeeping was largely accurate. Their review found that records and accounts had been maintained in accordance with standard practice. No significant discrepancies were identified in the ledger entries.

A $750,000 American Express facility held by the director was tapped to pay numerous creditor obligations. The card reached its limit by the time receivers were appointed. The facility’s exhaustion limited further financing options.

Asset Sale and New Ownership

The liquidators said that a dividend to any class of creditor other than employees was unlikely, given the significant debt burden and asset shortfall. The company’s remaining stock, with a book value of $1.185 million, was mostly held at a third-party logistics warehouse in Western Sydney, where the operator has sought to assert a lien over the stock for unpaid fees.

The liquidators’ efforts to resolve the lien claim over the stock were unsuccessful, limiting their ability to sell the stock and recover funds for creditors.