Ruth Tarvydas' embattled fashion empire appears set to receive a stay of execution, with the administrator in charge of her business recommending the flamboyant WA designer be given seven months to try to clear her debts.
The recommendation means Tarvydas' company will avoid liquidation in the short term if creditors, including her former King Street landlord, agree with the administrator.
Instead, her future will hinge on her ability to secure third-party investment for intellectual property she wants to sell, as well as profit she hopes to generate from her new store at Claremont's Times Square.
Tarvydas was forced to close her flagship King Street store and appoint administrators to her company RTI (WA) Pty Ltd in October after she lost the support of her long-time financier, ANZ Bank. At the time of the collapse, RTI owed more than $1 million to creditors.
In his latest creditors' report, HLB Mann Judd (Insolvency WA) principal Kim Wallman recommended creditors accept a deed of company arrangement proposed by Tarvydas.
Mr Wallman said though there was no guarantee Tarvydas would succeed in raising the money, it represented a chance for creditors to recoup something.
"In summary, given that ordinary unsecured creditors are likely to receive no return in a liquidation scenario, there is little downside in allowing the director seven months to come up with funds under the proposed DOCA," he said.
Creditors are scheduled to vote on Mr Wallman's recommendation next week.