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Clicks-and-mortar cosmetics retailer Icon and parent company Dream Asia, the brainchildren of entrepreneur Elliot Yuen Wai-kuen, are in the process of voluntary liquidation and will hold a creditors' meeting today.

An affiliate of its majority investor, Strategic Capital Group (SCG), also is going through its own winding-up.

All of Icon's investment money was funnelled through the Internet investment conglomerate, and SCG (Hong Kong) has set a members' meeting on September 14 to pass a resolution of voluntary liquidation.

Dream Asia was a minority investor in the planned pan-Asian cosmetics sales operation. As late as March, Mr Yuen had hopes of eventually expanding across Australia, Japan, Malaysia, Singapore, South Korea and Taiwan. Now, the company will hold its extraordinary general and creditors' meetings at a Social Services building in Wan Chai.

Chief executive Mr Yuen said: 'We are just a small company and this [liquidation] is just a matter of business.' He declined to make further comment on the situation before today's gathering.

The retailer launched the Icon cosmetics megastore in Causeway Bay last June and made his online push in December, with the help of acquisitions looks.com and ecosmetics.com.hk.

In late February, Mr Yuen said he hoped to achieve annual sales of HK$300 million and a public offering within two years, with the help of US$10 million in funding.

Provisional liquidator Jim Wardell with CCIF Corporate Advisory Services said Dream Asia had suffered from the negative business environment.

'The retail business in Hong Kong is going through hard times and, unfortunately, Dream Asia ran out of funding and money, and had to go to liquidation. This is a fact of life,' Mr Wardell said.

'In a liquidation, everybody loses - the investors, the shareholders, the employees.'

SCG chief executive Eric Solberg declined to comment on the situation. CCIF's Jackson Ip, who has been proposed as liquidator for SCG (Hong Kong), said his firm had not taken over at this stage and could not comment.

The previously accessible SCG Web site has been closed off to visitors and requires a password to enter.

Dream Asia had hoped to franchise more megastores such as the 10,000 square foot outlet in Causeway Bay in other cities throughout North Asia. Mr Yuen had managed to raise money just before the dotcom bubble burst.

Although women in Asia spend about US$30 billion a year on cosmetics, there are many other players on the online scene. In Hong Kong, they include sasa.com, and strawberrynet.com, which are both operated by experienced regional retailers, along with misskat.com.

In February, Mr Yuen said the company had about 70 employees and had spent a lot of money on advertising and operations to build a brand name.

The company's backers included IBM, Jebsen & Co and HSBC through one of its investment companies. On Thursday, Mr Yuen said the blue-chip supporters had funnelled all the money through SCG and he could not discuss that company's situation.

A creditor estimated that Dream Asia had spent US$17 million to US$20 million. On Thursday, Mr Yuen said 'definitely less than that' had been spent on the operation.

This summer, technology partner IBM took Dream Asia to court for HK$7.7 million over equipment and software sales. IBM managed to repossess some equipment, one creditor said.

Advertising agency Bates Hong Kong also involved Dream Asia in a legal action this summer, seeking payment of HK$1.2 million.

Mr Yuen has been closely involved in Hong Kong's retail scene and was poised to pay HK$33 million for a 10.7 per cent stake in Joyce Boutique before SCG's proposed takeover of the retailer collapsed last year.

One creditor has requested the attendance of restructuring and liquidation firm Baker Tilly at today's meeting. CCIF has been proposed as liquidator for both Dream Asia and SCG (Hong Kong).



Icon set for liquidation as retail remains bleak