05 April, 2017
From the humble beginnings of a £100 loan, to a business sale of £95 million; it seemed like Karen Millen's success story had already reached the part where they all lived "happily ever after". The latest chapter however reveals that Millen has now been declared bankrupt, resulting from an unpaid tax bill, mismanaged investment, and mammoth court costs.
Along with the failure of Kaupthing - which lost Millen tens of millions in personal investments - Millen blames her situation on her accountants' advice to enter into the "Round the World" tax "planning" scheme. An investigation in 2010 resulted in HMRC pursuing her for £6 million in unpaid taxes.
To add to this, Millen was left with court orders to pay around £2m - £3m in legal costs, after an unsuccessful legal battle spanning 2012-2015; for the right to use her name on her own new designs. When Millen sold her share of the company, the agreement involved Millen signing away the rights to use her name, regardless of whether she was still designing for the business or not.
For over ten years Millen had no creative involvement in the company or its output. When attempting to re-establish herself on the fashion scene, the high court ruled against Millen putting out new designs using her full or abbreviated name. They held that besides potentially confusing consumers, she would be in breach of her original agreement - which was lucrative to say the least.
After unsuccessfully attempting to claim against both Kaupthing and the business that bears her name, Karen Millen has learned a hard lesson, all within the public eye. The missteps and choices made highlight how negotiating the best deal in the long term must always be paramount. Business owners should always seek advice and ensure they understand fully the ties that may bind them beyond their initial foresight.
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