Venture capital investors aren’t the only ones burned by the collapse of luxury furniture retailer Brosa, with customers leaving about $10 million out of pocket for products they paid to not get, a report on the startup’s finances by administrators, KordaMentha, reveals.

Brosa was placed under voluntary administration on Dec. 14 with assets of $4.3 million and liabilities of $24.2 million, including approximately $10 million in unfulfilled orders.

The managers found that Brosa was hurt by pressure on working capital, especially inventory, and the inability to maintain margins due to Covid. Despite strong sales during the pandemic, the company has made significant losses in its last three years of operation.

Brosa’s main assets have sold for $1.5 million to Kogan.com just before Christmas, KordaMentha is now recommending that creditors vote next week to liquidate the company after selling its assets

Administrators Richard Tucker and Michael Korda said gDue to the material cash flow shortfall, it was not possible to keep the business running or to deliver and so an emergency sale of the assets was held before Christmas.

More than 40 expressions of interest were received, leading to eight offers, three of which advanced to a final round.

“Kogan.com’s $1.5 million offer was significantly better to stakeholders overall than the next-best offer, especially since it resolved approximately 2,500 customers who had paid for goods identified in the Brosa warehouses that otherwise would not have received their stuff,” Tucker said.

“For these customers, Kogan.com has taken responsibility for the delivery of their goods (but may charge a reasonable fee for this) or make available a store credit that can be used against any item sold on Kogan.com and that Brosa will sell. products next to Brosa.com.au. Kogan is currently working on this process.”

Kogan.com bought Brosa’s intellectual property, goodwill and stock, but not leases and other obligations.

Also financially affected by Brosa’s bankruptcy are venture capital backers, including Airtree and ASX-listed Bailador Technology Investments, which has invested more than $7 million in the company. Bailador still had an investment in Brosa worth $4.5 million as of mid-2022.

The Melbourne startup was founded in 2014 by Ivan Lim and Richard Li. It raised $2 million in 2015 from AirTree Ventures, then raised another $5 million in a Series B in 2017, backed by AirTree, BMY Group, and Bailador.

said Richard Tucker employees should be given their full dues, but many others who owe money will miss out, including thousands of customers.

“Unfortunately, there is no return for unsecured creditors, including customers whose orders have not been found in the warehouses,” he said.

“With limited cash to trade the business and material amounts owed to suppliers and couriers, some customers will not receive their orders. We understand the extreme frustration for those affected, but the trustees have no resources to procure or deliver these goods as there are insufficient resources to do so.”