Entrepreneur who lost millions after collapse of Kaupthing bank in 2008 fights for legal right to trade under her own name
Four years ago the designer Karen Millen was one half of high street fashion's most powerful couple, with combined interests in Oasis, All Saints, Whistles, Ghost, House of Fraser, French Connection and Principles. Then, almost overnight, she and her former husband Kevin Stanford lost it all in the Icelandic banking crash.
Now the two entrepreneurs, who divorced in 2001 but kept many of their business interests closely intertwined, are pursuing a series of legal claims against the estate of Kaupthing bank, which went bust in October 2008. Sums sought exceed £500m.
"I will not rest until I have my company completely restored to me," said Millen, speaking for the first time after meeting Icelandic investigators earlier this month.
She said she was shocked to see Kaupthing at the heart of several fraud investigations, after the bank was accused of covering up spiralling financial problems in the months before its collapse by hiding toxic investments and manipulating shares. "In my opinion, 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.
"The customers and partners of the banks lost their assets, large chunks of the UK high street became owned by the Icelandic liquidators … This is simply wrong and I am not going to rest until I have my company completely restored to me."
Earlier this month Millen was among several witnesses in the UK interviewed by Icelandic prosecutors examining suspected market manipulation at Kaupthing – allegations denied by bank bosses. Lawyers for the couple have said Stanford too was unwittingly embroiled in a manipulation attempt orchestrated by former bankers. Millen and Stanford are not suspected of wrongdoing.
Having made her name as a designer helping to define what women wear to work since the 80s, Millen is determined to start trading again. But the firm which bears her name – still controlled by Kaupthing administrators – has warned of a trademark infringement if she returns to business, as planned, under the brand name Karen or KM.
Millen has said she will fight the trademark dispute. In addition, her law firm Speechly Bircham is pursuing a legal challenge to the way Millen lost a near 7% interest in Mosaic Fashions, which operated more than 1,800 stores.
Struggling under its debts and tough high street trading conditions, Mosaic lost several of its brands in 2008 and went bust the following year. However, some of the brands, including Karen Millen, Coast and Oasis, continue to thrive.
In a separate lawsuit, Stanford is suing the Kaupthing estate in Luxembourg for more than £500m. Among the assets he wants restored to him is a 25% interest in designer brand Mulberry.
Early in her career, Millen credited Stanford as the more commercially driven of the two after they opened a shop selling work clothes for women in Maidstone, Kent, in 1983. "It was always Kevin," she said at the time. "He's the ambitious one. I've just gone along with it."
After their marriage ended, Stanford led the couple into a series of complex dealings with Kaupthing and with Baugur, an Icelandic investment group which bought interests in some of Britain's best-known high street names, including Hamleys, Woolworths, House of Fraser, French Connection and Mappin & Webb.
From 2001 Millen and Stanford had steadily sold down their interest in the Karen Millen fashion empire, allowing Baugur to become the dominant investor. By 2008, a complex series of deals had left Stanford, who had become close to Baugur boss Jon Asgeir Johannesson, with an 8% holding in Baugur, a 4% stake in Kaupthing and interests in several other Icelandic investment vehicles. All failed after the crash in October 2008.
Since then Stanford and Kaupthing administrators have been mired in a web of claims and counter-claims. Stanford had also been a borrower from Kaupthing and, in 2009, was said by lawyers acting for the bank to owe more than £250m.
Last year, Stanford's lawyers, also from Speechly Bircham, claimed Kaupthing, before its failure, had operated an "unlawful … share support scheme … specifically designed to create a false market in shares for Kaupthing".
Stanford has proved surprisingly resilient, despite losing almost all his business interests. A bitter battle with Kaupthing over control of All Saints ended in the UK courts ruling in the bank's favour. However, Stanford returned to lead the business last year after recruiting private equity backers to buy out his Icelandic banking foes.