Karen Millen sues Icelandic bank for 500m after she lost business in 2008 crash

'I won't rest until I have my company restored to me': Karen Millen sues Icelandic bank for 500m after she lost business in 2008 crash

By
Deborah Arthurs

PUBLISHED:

15:30 GMT, 19 March 2012

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UPDATED:

17:19 GMT, 19 March 2012

Karen Millen, the businesswoman and designer behind the eponymous high street chain, is suing the Icelandic bank she believes caused her to lose everything.

The designer is pursuing a number of legal claims against the estate of Kaupthing after it was revealed the bank was being investigated for fraudulent activity in the run up to the Icelandic banking crash in October 2008.

Kaupthing is accused of failing to admit it was in financial crisis in the months preceding the crash and engineering a cover-up to conceal mounting problems. They stand accused of hiding toxic investments and manipulating the market – allegations that the bank's estate denies.

Unjust: Karen Millen says it's wrong that that a bank should pretend to have money and security which it doesn't have

Unjust: Karen Millen says it's wrong that that a bank should pretend to have money and security which it doesn't have

Ms Millen met with Icelandic investigators in the UK earlier this month, who are examining the events which led up to the crash.

The value of the compensation sought by Ms Millen is in excess of 500m.

Before the Icelandic bank collapse, Ms Millen and her business partner – former husband Kevin Stanford – were flying high in the fashion industry, with interests in Oasis, Whistles, All Saints, House of Fraser, Ghost and Principles, as well as Karen Millen.

But when the Icelandic financial industry collapsed so comprehensively the two, who divorced in 2001 but maintained the commercial interests they had together, lost everything.

Bust: When Kaupthing collapsed in 2008 it had a drastic knock-on effect on the British high street

Bust: When Kaupthing collapsed in 2008 it had a drastic knock-on effect on the British high street

The Icelandic banks had helped fund the investment group Baugur, which owned major stakes in the likes of Oasis, Warehouse, Iceland, Principles and Karen Millen. Together, they employed 52,000 staff.

By the time of the Icelandic crash, Ms
Millen and Mr Stanford had sold the majority of their shares in Karen
Millen, with Baugur becoming one of the main investors.

The two were left with an 8 per cent stake in Baugur, a 4 per cent stake in Kaupthing, and money invested in further Icelandic financial firms – all of which went bust in the collapse.

Speaking to the Guardian, Ms Millen said she was 'shocked' to see Kaupthing named in the investigations.

'It is quite wrong that a bank can pretend to have money and security which it doesn't have, generate a false balance sheet and use its own customers to fund acquisition ambitions,' she said.

'This is wrong and I am not going to rest until I have my company completely restored to me.'

Ms Millen is keen to begin trading again, but the Karen Millen brand is now controlled by the Kaupthing administrators.

With her own name now out of her reach, Ms Millen has been informed that she could face legal action for trademark infringement even if she attempts to trade under the name Karen or KM.

In September last year a trust advised by property mogul Vincent Tchenguiz settled a legal battle with Kaupthing over losses it incurred after the Icelandic bank’s collapse three years ago.

Under the settlement, the Tchenguiz Family Trust will receive an undisclosed sum from administrators winding up Kaupthing.