Need to know
- When Brosa fell into voluntary administration on 14 December, about $10 million worth of orders remained undelivered
- Brosa customers are now divided into two categories – those whose goods have been located, and those whose goods are likely gone for good
- Around 2790 Brosa customers are unlikely to receive their orders or a refund
Thousands of customers of online furniture retailer Brosa are in the dark about when their orders, placed before the company collapsed, will be delivered.
Thousands more are coming to understand they won't be receiving their orders at all – and won't get their money back either.
Brosa went into voluntary administration on 14 December 2022, with the firm KordaMentha appointed as administrators. Brosa was then acquired by Kogan on 21 December, leaving customers with outstanding orders in limbo.
More than 5000 people out of pocket
A KordaMentha spokesperson tells CHOICE that about 5290 Brosa customers have paid for goods that haven't been delivered.
Of those, about 2500 have orders that have been located in warehouses, "but the numbers are subject to confirmation as Kogan works through the systems".
"Kogan has said it will process these orders and have them dispatched to those customers or provide a store credit to be used at any Kogan-owned e-commerce business," the spokesperson says.
The other 2790 customers have paid for goods that haven't been located in warehouses – classed as 'unallocated stock' – and the prospects of receiving the goods or a refund are not particularly good.
Consumers last in line for payment
Usually, when a business goes into administration, secured creditors such as the business's bank and major suppliers are repaid first. Customers are considered unsecured creditors, and they often receive only a partial repayment or nothing at all.
There is unlikely to be any surplus [cash] available for distribution to unsecured creditors
KordaMentha spokesperson
In the case of Brosa, secured creditors include former Brosa employees who haven't been paid and a lender that provided funding. Employees will be paid in full, while the lender will receive 67 cents on the dollar, according to the creditors report.
As for customers whose orders remain at large, the spokesperson says "there is unlikely to be any surplus [cash] available for distribution to unsecured creditors".
When Brosa was placed in voluntary administration, it had assets of $4.3 million and liabilities of $24.2 million, including about $10 million in unfulfilled orders.
In a statement released on 23 January, KordaMentha says: "With limited cash to trade the business and material amounts owed to suppliers and couriers, there will be some customers who will not receive their orders. We understand the extreme frustration for those impacted, however the administrators have no means to acquire these goods or deliver them as there are insufficient funds to do so."
When Brosa was placed in voluntary administration, it had about $10 million worth of unfulfilled orders.
Customers told they're out of luck
Liz* bought a sofa from Brosa in August and was scheduled to have it delivered on 19 December.
"The only correspondence that I have received in regards to my order is from KordaMentha stating that my items are unallocated and I should not expect a refund from them or for Kogan to arrange delivery," Liz says.
"This is despite the order being paid in full and scheduled for delivery. My sofa is sitting somewhere in a warehouse waiting to be picked up. I have called KordaMentha for more answers but they either refuse to transfer me to the person in charge or tell me there's nothing I can do."
Another customer says on Facebook that she paid $6200 for a modular couch to replace one that was ruined by flood waters. She too has been told that the couch is unallocated stock. "We are devastated," she says.
I have lost over $2000 and I have no sofa. I have never been treated with such contempt in my life
Brosa customer Liz
Many affected customers have taken to social media to express shock that their money can simply disappear amid the administrative dealings between Kogan and administrators KordaMentha.
"The most infuriating part of the situation is that nobody cares," Liz says. "The half of us who have unallocated stock don't have any options for getting our items, and refunds are unlikely. I have lost over $2000 and I have no sofa. I have never been treated with such contempt in my life."
Thousands of orders likely lost for good
In a series of recent communications, Kogan and KordaMentha have stated the following:
- Brosa customers who paid for orders that haven't arrived will be contacted by Kogan.
- Customers who have been contacted (and whose orders have been located) have until 17 February 2023 to either have their order delivered or accept a Kogan credit. Delivery fees may apply. After this date, the 'abandoned stock' will be owned by Kogan, though Kogan will pay a maximum of 50% of its value to the administrator, minus any expenses.
- KordaMentha divides customers with unfulfilled orders into two categories: those with 'identified' and those with 'non-identified' (or unallocated) goods.
- Those with 'identified' goods should expect to receive them, though no timeline has been set.
- Those with 'non-identified' goods (probably in transit from overseas or still in production) are likely out of luck and will have to register with the administrator as 'unsecured creditors'. No refunds will be available to these customers.
Many undelivered Brosa goods remain with suppliers who have yet to be paid.
Faulty goods with no recourse
There's another category of customers who've been handed a raw deal – those who purchased items from Brosa before it went into administration, and the items have major faults.
A number of customers who have commented on Facebook fall into this category. Under Australian Consumer Law, they would be entitled to a replacement or a refund for the faulty goods, but Kogan has said it "will be unable to provide assistance as this transaction was with the prior owners".
We contacted Kogan for comment but didn't receive a reply.
How to (try to) reclaim your funds
There's no guarantee that you'll get your money back if you didn't receive your order, but it's certainly worth trying.
- Make a chargeback claim on your credit card.
- If you used a buy now, pay later service, check its terms and conditions regarding companies in administration.
- Fill out a proof of debt form from the administrator and lodge it here.
*'Liz' is a pseudonym
Brosa still doing business
The briefing we received from KordaMentha underscores the unfairness of the voluntary administration process when it comes to dealing with customers of companies that go under.
Kogan purchased Brosa, a company recently valued at over $60 million, for $1.5 million. The deal came with a commitment on Kogan's part to provide "logistics support for thousands of customers with undelivered orders".
Yet Kogan declined to take on Brosa's existing liabilities, only offering to resolve unfulfilled customer orders in cases where Brosa could locate the stock.
You can order furniture from the new Kogan-owned Brosa today, yet Brosa customers whose orders were paid for but were in transit or still overseas on 14 December will likely get neither the goods nor a refund.
Similarly, Brosa customers who had gift cards had a mere 17 days to redeem them after the company went into administration on 14 December. The value of any unused cards went into the pool of money administered by KordaMentha after 31 December.
The Kogan bid, while not being able to deal with every potential creditor, provided a vastly better outcome for stakeholders overall than the next best offer
KordaMentha spokesperson
The KordaMentha spokesperson says the Kogan acquisition was the best solution for many creditors, but not for the thousands of customers with 'non-identified' goods.
"The Kogan bid, while not being able to deal with every potential creditor, provided a vastly better outcome for stakeholders overall than the next best offer," the spokesperson says.
"It offered a solution to Category 1 customers [those whose items could be located] and could be completed quickly as the deadline for the creditors' meeting approached. The sale agreement allowed full payment for priority creditors, including employees' entitlements and a return to the sole secured creditor."
Stock images: Getty, unless otherwise stated.
