Designer Karen Millen Declares Bankruptcy
A £6 million ($7,526,400) tax bill put designer Karen Millen into a declaration of bankruptcy on March 28, according to The Times.
Karen Millen designs focused on business and evening wear for women. Millen began the business with Kevin Stanford, her (now former) partner, on a £100 loan. The two married, but separated in 2001, selling some of their business to a bank in Iceland, Kaupthing.
In 2004 the Karen Millen brand took a merger with high street clothing brand Oasis, becoming Mosaic Fashions. Millen and Stanford no longer held majority control of the company, but each of them received something around £35 million by selling, The Times reported.
Millen still had 7% holdings with Mosaic Fashions, and Stanford had Baugar and Kaupthing shareholdings. Baugar was associated with Mosaic Fashions. However, in the 2008 economic downfall, Kaupthing collapsed. Kaupthing was the financing backer of Karen Millen’s £95 million 2004 sale.
Millen suffered other losses through investments in 2008, and she said that legal conflicts with Kaupthing took their toll on her finances and her energy.
In 2016 the High Court ruled that Millen could not start a new business under the name Karen Millen, since it would conflict with the preexisting Karen Millen label, which Kaupthing now owns.
The £6 million bill that finalized Millen’s bankruptcy comes after an unsuccessful tax avoidance attempt. In 2001, Millen’s accountants proposed the “Round the World” scheme, she said. The scheme involved putting shares in trustee holding outside the UK, in Mauritius. Supposedly, Round the World would enable up to £70 million in avoidance on tax for share sales, but HMRC took it to the courts and won, serving Millen the tax notice last September.
Millen considers Kaupthing responsible for her insolvency and also said that Mosaic and Baugur’s failures caused her large losses.
After creating a brand that climbed worldwide sales in 130 stores, Millen may lose various possessions and her Kent home, a £3 million property. Now, Millen said, she hopes to put the past in the past and find a new start.