Friday, 27 February 2009

Pre-packs: now you can have your say

Fashionista has been mulling over the buzz words which have come out of the current economic climate to ensure that she is on top of all the new lingo. Fashionista does, of course, consider herself to be a "recessionista" i.e. a person who is able to remain fabulously stylish during times of economic hardship and is all too aware that her "credit" has been severely "crunched" (if you are unsure of the meaning just check the latest edition of the Oxford Dictionary where the term now appears). There is even a dedicated blog for Recessionistas giving you access to the best bargains in town.

One of the more controversial buzz words, in Fashionista's view, is the term "pre-packs" which has become a staple phrase particularly in the retail sector owing to the large number of "pre-pack" deals which have taken place in this space.
A "pre-pack" is generally a deal where a company is put into administration and its business and assets are then immediately sold under a sale agreement which was negotiated before the administrator was appointed. Recent examples include the sales of Faith, USC and Envy which took place towards the end of last year, all of which were sold by way of a pre-pack transaction.

There are no specific regulations that deal with pre-packs although the insolvency processes and insolvency practitioners are themselves under the regulation of their professional bodies and control of the courts. Fashionista is aware however that the Association of Business Recovery Professionals have recently produced Statement of Insolvency Practice 16 which obliges insolvency practitioners to give substantial information to the unsecured creditors as to why a pre-pack was used. This is however not provided until after the deal has been concluded and accordingly some might say that is a little late to be closing the gate (with the horse being long over the horizon).

Pre-packs can help preserve businesses and jobs, as well as achieving an enhanced value for the assets of an insolvent company, but critics say they allow the old management to walk away from their debts too easily whilst still allowing them to remain involved with the purchaser going forward (like a phoenix from the flames). The mantra of "if at first you don’t succeed, try, try again" does not seem in such circumstances to instil the right level of confidence! Fashionista's view on this is much the same as her view of stonewashed jeans with matching denim jackets- there's a time and a place for them (in the latter case, for cowboy themed fancy dress parties only!).

Interestingly, the Insolvency Service has now invited complaints from anyone who feels unduly disadvantaged by a pre-pack sale so it seems that there is an effort to give pre-packs a much needed image overhaul. Time will tell as to how effective this is.

Tuesday, 24 February 2009

Creditors dig their heels in on Stylo CVA plans

Fashionista, like most women on the planet, loves her shoes and has been admirably trying to make up for the drop in consumer spending by flexing her plastic. However, one women's efforts are insufficient to stop falling sales, particularly as regards the footwear sector, which has been hard hit over the past year or so.

Stylo, the footwear group which owns Barratts and Priceless, looks to be the most recent footwear victim as it failed to secure enough support for its Company Voluntary Arrangement ("CVA") recently and fell into administration, like so many of its footwear competitors. So what then Fashionista asks is a CVA and why might a creditor (for example, a landlord) not be in favour of such an arrangement?

For those who don't know, a CVA is a court administered agreement between a company, its creditors and its members entered into with a view to avoiding a complete corporate failure. CVAs can take a number of forms but they essentially look to compromise creditors' claims in return for a reduced payment pro rata to those creditors' claims and/or payment over time, the end result being the survival of the restructured company.

A CVA can be undertaken either by the company itself, acting by its directors, or by an administrator (or liquidator as the case may be) when the company is already in an insolvency process. The moratorium given by the administration allows time and protection from creditor interference for the administrator to draft a proposal for a CVA. Alternatively, the directors of the company may propose a CVA without first putting the company into administration or liquidation. The CVA needs to be approved by ordinary resolution at a members meeting and by a majority in excess of three-quarters in value of the creditors voting at a creditors meeting, which unfortunately Stylo wasn't able to secure.

In considering CVAs, landlords are often asked to take a significant haircut on their outstanding rental payments and indeed to reduce rental payments going forward or provide rent-free periods as part of the suggested proposals. This is often coupled with waivers of guarantor liabilities from other group companies, a precedent which (particualrly for landlords with large portfolios of properties) many are not prepared to accept. In addition, landlords and other creditors may find it an unattractive proposition to allow the existing management retain control of the business going forward - if they have failed once, the view often taken is that they are likely to fail again.
Recent reports in Drapers suggest that Stylo chairman and chief executive Michael Ziff and family have bought the Stylo, Barratts and Priceless names from administrators Deloitte as well as 160 stores, the internet business and Stylo’s 165 concessions within Dorothy Perkins which is good news for Stylo and good news for Fashionista and other shoe lovers.

Monday, 23 February 2009

Sounding off: the dangers of reviews and comment-based sites

Fashionista's attention has been drawn by Vicki Day of Pure Sauce to a growing desire in the UK for replicating the model of sites such as, a US site which encourages fashion designers and sales reps to post details of which retail stores they have done good and bad business with. Some of the comments can get pretty catty indeed. One particularly choice example reads along the lines of alleging that "X should be locked up in jail or fed to the Hawaiian SHARKS...this woman is a criminal". No mincing words there then!

But is it legal to have such a website in the UK? Isn't this just an invitation for nightmare defamation claims?

The laws in the UK don't prevent sites from allowing posters to upload comments per se and such sites certainly can be very popular. Think for example of the success of electronic goods or restaurant review sites or even blogs which invite viewer responses. It is also worth remembering that there are potential defences to a defamation claim such as truth (although proving this may be another matter).

However things can certainly go wrong. Posts can be made which are defamatory or unlawful in other respects such as infringing of intellectual property rights. Whilst the poster is unlikely to be able to rest easy (and even the mask of anonymity won't help if a court order can require the website to disclose the poster's details) a website may still be able to find some protection in the UK provided it treads carefully and has done its homework. A website may, for example, be able to rely on defences in Electronic Commerce Regulations where it is only hosting such information and has not monitored, amended or had notice of the unlawful content. It is a tricky area however and much care is needed in the design of a website in order to understand the risks and ensure that it is set up and managed in a defence-friendly manner. It will also be essential to respond to complaints and take down content which is the subject of such complaints as soon as possible.

An alternative option is to monitor and amend content to ensure that it is toned down and no longer unlawful but this can be very risky if something is missed. Fashionista also thinks this can rather spoil the freedom of speech and spontaneous gossip fun of it all which attracts readers in the first place....

Friday, 20 February 2009

Welcome to and thank you for visiting Fashionista-at-law!

Fashionista-at-law aims to deliver stories about the hot legal topics facing the fashion sector, highlighting current and need-to-know issues and sharing tips about how to deal with them. Our contributors have experience across the entire range of legal issues of interest to the fashion industry from corporate and intellectual property, through to employment, e-commerce and real estate, not forgetting (in the current climate) insolvency and restructuring.

Our ambition is to make Fashionista-at-law the place to read about the legal issues facing the fashion industry today. We have exciting plans for the coming year, including the introduction of guest contributors from the fashion industry, seminars and networking events.

But we also want to hear your views on the things that you would like to see covered so please email Fashionista at with your feedback about the site and with your ideas for legal issues you'd like Fashionista to write about.

Thursday, 19 February 2009

Better deals for all tenants or just the luxury sector?

Landlords are starting to realise that if they want to achieve lettings and fill their high street or high end retail premises, they have to be more flexible on rents. While some of the big retailers are either closing stores or not in a position to expand, the smaller value retailers are being made offers and getting approached to take space they would not normally be considered for. Fashionista's view is that there are some bargains to be had.

In this credit crunch era landlords are becoming troubled tenants' largest creditors and can wield significant influence in particular at creditor meetings. As reported in Drapers, at the recent creditors meeting to save Stylo (the owner of Barretts and Priceless) the vote to accept the company voluntary arrangement is said to have been defeated by the group's landlords who voted against reduced turnover rents.

So, where does this leave the more up-market fashion retailers? Are they in a better position to negotiate favourable terms on new leases, especially where the available premises are considered 'high end'? Up market retailers may secure lower rents per square foot more easily than their more down-market contemporaries because of their strong brand values and clarity as to their target customer. They stand out in shaky economic times. Wouldn't a landlord of a higher end property want a better looking, more resilient, on-trend fashion tenant?

It appears so - the market is awash with the news that many luxury brands are seeking and securing prime retail space in London – Fred Perry has recently taken an assignment of a lease of space in James Street WC2 which has 6 years to run while Jack Wills, the self styled university outfitter, is taking over Diesel's Kings Road premises and a lease with 11-years to run. The bargaining position of landlords is not to be totally written off, as recent situations have attested. Jack Wills, for example, is paying a premium for its recently acquired Kings Road premises.

Wednesday, 18 February 2009

January online spending up 32%

Fashionista is enjoying reading some good news about the economy! Drapers reported yesterday that according to the IMRG Capgemini e-Retail Sales Index, total online spending rose 19% in January, with the increase in clothing and accessories, a fantastic 32%. Whether consumers feel that they get better value for money online, or whether it's purely down to the convenience factor, it is clear that more and more people are shopping for clothes online.
With online now the obvious growth sector for fashion retail, all retailers must now invest in a transactional website which delivers the best experience possible. For example, Fashionista noticed that Alexon has recently announced that as part of its overhaul of the Bay Trading brand, it will be launching a transactional website for the brand in the Spring.

Brands looking to launch an online offering are likely to outsource some or all of the online retail process to an external service provider. While outsourcing can save costs, brandowners should be mindful that they will lose control over delivery of the consumer experience. As a result, it's vital that the contract with the service provider sets out a clear description of the services being provided, together with detailled service levels and monitoring and reporting provisions. Service levels enable the brand to set the threshold of what service is "good enough", and service credits encourage performance by acting as a credit against the contract price if the service falls below the required threshold.

Fashionista warns that, as with all things legal, the devil is in the detail. For instance, if the website is hosted by a third party, the brand will want an assurance that the website will be available 24/7. Many hosters offer a guarantee of "99.5% availability". While this may sound impressive, it would actually allow 43 hours of downtime in a year. And what's more, the downtime could be at key selling times, such as the run up to Christmas. Speaking from experience, Fashionista recommends investing in the legal resource necessary to get a solid contract at the outset so you have recourse when things go wrong.

Tuesday, 17 February 2009

Viva Vintage!

Marks & Spencer has announced that to celebrate its 125th anniversary year, it will exhibit the highlights from its extensive archive collection in partnership with the University of Leeds. Through the exhibition Marks & Spencer will demonstrate how its designs have been woven into the social and cultural fabric of British life. Undoubtedly the M&S archive will have influenced British fashion.

Vintage designs are an increasing source of inspiration for modern designers. For example, this season, as reported in Vogue, the Eighties is a strong trend seen in a number of designer collections including Moschino, Balmain, Giles, Stella McCartney, Julien Macdonald and Gucci.

Fashionista notes that while, it is usually safe for designers to take inspiration from vintage designs that are sufficiently old that any relevant protection has expired (10-15 years for UK unregistered designs or 25 years for copyright works exploited by an industrial process) for well-known prints, it is conceivable that the original designer achieved a significant reputation in a particular design which could give rise to protection under the law of passing-off, if it led consumers to think there had been a collaboration between the retailer and the original designer, such as Celia Birtwell's recent collections for TopShop.

P.S. Those that currently supply M&S face some tough negotiations ahead. As Fashionista was writing this post, Drapers reported that M&S is looking to renegotiate terms with its European, South American and Far East suppliers in a bid to compensate for the weak sterling. For once, there is an advantage to being British!

Monday, 16 February 2009

Eastern Opportunities

Fashionista notes with interest the growing trend for retailers to turn to emerging markets whilst trading conditions in the UK continue to be troublesome. As reported in Retail Week, Inditex has signed a deal to open stores in India in 2010. Local law prevents foreign holdings of more than 51 per cent in single brand retail, so Inditex has formed a joint venture partnership with Tata Group to open Zara stores in cities including New Delhi and Mumbai. Inditex will control 51 per cent of the venture, while Trent, a Tata Group company, will control the remaining 49 per cent.

Whilst this means that Inditex will have to share the upside, it also clearly provides an opportunity to mitigate any risk. Fashionista notes that whilst her man on the ground in Mumbai has greeted the news of Zara's impending arrival with polite interest, his wife is positively delighted!

Sunday, 15 February 2009

YSL estate won't let go of rabbit and rat

According to The Scotsman, China has demanded the return of looted imperial bronzes due to be auctioned in Paris as part of the estate of the late French fashion designer Yves Saint Laurent. The bronzes -- a rat's head and a rabbit's head -- disappeared in 1860, when French and British forces looted and then burned the former summer palace on the outskirts of Beijing at the end of the second Opium War.

The two relics date back to the early Qing dynasty, established by invading Manchu tribesmen in 1644. They were made for the Zodiac fountain of the summer Imperial Palace. They are expected to sell for as much as £9 million each at the auction on 23-25 February. There have been calls in China for a boycott of French goods and China has cancelled talks with the European Union in protest at talks between Nicolas Sarkozy, the French president, and the Dalai Lama, whom the Chinese accuse of supporting Tibetan separatism.

Fashionista heaves a sigh of relief that China isn't making any threat to appropriate the YSL brand and 'liberate' it for general use. Such sanctions are available and may be awarded for failure to comply with World Trade Organization norms of conduct, but this doesn't apply to disputes between a state and an individual, which is effectively what this is.

Friday, 13 February 2009

The right to return and a close escape for Fashionista

Fashionista's sister is getting married and was distraught when a UK website recently told her she couldn't return the three rockabilly style bridesmaids dresses she had just had delivered.

The colour palette is all wrong though and it's a credit crunch budget wedding after all so Fashionista's sister was agonising about dying options or where other costs could be cut to fund replacements. What could be done?

Luckily, chief bridesmaid Fashionista was able to step in.

Any consumer buying from a website is entitled to a full right of return and refund (including the initial delivery costs) for any reason at all provided the right to cancel is exercised in the first 7 working days (therefore excluding weekends) from the day after the date of delivery. After a short slap over the knuckles of an email, the website quickly relented which is excellent news all round... especially since Fashionista won't have to wear lemon yellow in public now!

Thursday, 12 February 2009

Red Carpet News

Fashionista notes reports from Sky News that Hollywood stars are being asked to avoid the red carpet this year in an effort to create an element of surprise at the Oscars ceremony. Following poor viewing figures for the event last year (Sky News reports that figures averaged 32 million, making it the least-watched Oscars ever), the organisers seem to be attempting to spice things up by asking celebs to use an off-camera entrance so that they make their first public appearance on stage. This presents an obvious dilemma for the fashion industry and designers - it's unlikely that Hollywood's hottest property will be asked what they are wearing when giving or receiving one of the coveted golden statues!

Fashionista expects that designers will still go to "Herculean" efforts to secure stars like Beyonce and Natalie Portman to wear their creations, but will the likes of De Beers and Cartier still risk their priceless jewels when they are not guaranteed a red carpet credit?

Fashionista ponders whether if they are spending their own cash, the stars will opt for slightly less extravagant jewellery like the Fruit and Nut necklaces adorning the likes of Alex Kingston and Jane Horrocks in portraits that will be on show at the Fairtrade Fortnight exhibition at the Eden Project in Cornwall starting next week...

Wednesday, 11 February 2009

Baugur's fall from fashion....

As Baugur handed over the keys of its UK headquarters to its administrators, PricewaterhouseCooper this week, Fashionista found it hard to believe that only last year the company was awarded the President of Iceland's award for Export Achievement in recognition of its outstanding contribution to promoting and stimulating Icelandic exports. Contrast this with the recent accusations by Baugur boss Jon Asgeir Johannesson that it is senior political figures who have triggered the demise of the company by pursuing a vendetta against him.

No-one can deny the impact of Baugur on the retail sector, and the UK high street in particular. Companies related to Baugur employ some 50,000 people worldwide in over 3,500 stores with a total turnover of £5.4 billion and its investments include some of the most well known brands in the UK, including Hamleys, Whistles, Jane Norman, Mosaic Fashions and House of Fraser.

Baugur has been hard hit by the banking collapse. It is estimated that Baugur owes the now nationalised Icelandic banks (Landsbanki, Kaupthing and Glitnir) more than £1 billion and under the direction of the new Icelandic government, these banks are now seeking to recover these assets. Baugur and its biggest creditor, Landsbanki, had been holding discussions regarding a potential restructuring of the group until the bank withdrew its support and forced the parent company, BG Holdings, into administration. The bank has now seized control of the company's shares in Iceland supermarkets (14%), House of Fraser (35%), Aurum group of jewellers (including Mappin & Webb and Goldsmiths) (38%) and Hamleys toy store (64%) and Baugur is prevented from selling any assets without the bank's consent.

Baugur has successfully petitioned in Iceland to enter into a moratorium which will allow Baugur a period of review with temporary suspension of payments. This will apply until 4 March and, according to the company's website, will enable the company to facilitate a financial and operational restructuring in co-operation with its creditors in order to protect the interests of shareholders and value of the company's assets.

Even if the retail businesses within Baugur's stable continue to thrive (All Saints for example, had 43% like for like sales for the year to January 2009 and opened new stores in Paris and Antwerp), it is unlikely that the sale of Baugur's investments will realise their full value. Indeed Fashionista has read that banking sources suggest such sales would only raise 10p in the pound for creditors. Landsbanki has, according to Retail Week, recently claimed that it does not intend to immediately sell the shares it now controls, with the focus instead on maximising the long‑term value of the shareholdings.

With Mosaic also in talks with its lenders to secure its future and Shoe Studio and Principles up for sale, Fashionista finds it difficult to predict where some of Baugur's well known brands will end up or how the face of the British high street might change along the way.

Tuesday, 10 February 2009

Is online the way to succeed in 2009?

The BRC today reported that UK retail sales for January 2009 were up compared with January 2008 despite the economic crisis. While these figures were buoyed by food sales, with clothing and footwear in the poorer performing categories, online sales remained strong, up 19.2% from last year.

Fashionista suggests that online should be the focus of attention for fashion retailers this year.

While it is possible to build online business quickly with low barriers to entry, the story of Holly Tucker, founder of, as reported in the Times at the weekend, shows that sometimes the success can come too quickly.

Holly explains that despite large sales in the first year, the business nearly ran out of money after leaving it too late to get further investment: "The enormity of what we were doing led us to not keep our eye on the bottom line". Fortunately for Holly, she managed to raise further investment from selling a minority stake to a private-equity firm and subsequently from a deal with a venture capitalist, while retaining (along with her partner Sophie Cornish) a majority stake in the business.

As the landlords struggle to fill the high street, Fashionista expects more and more businesses to launch online. While the set up costs are relatively low, if the business takes off, make sure you leave enough time to secure the right sort of investor.

Sunday, 8 February 2009

Imitation, flattery and . . . tea on 5th Avenue

Fashionista is interested to read in The New York Times that Bergdorf Goodman is following in the elegantly shod footsteps of the Berkeley Hotel in London by offering a Prêt-à-Portea. During New York fashion week the BG restaurant in the luxury store will be offering teatime treats (not thought to be low calorie) based on designs of such fashion icons as Chanel, Christian Louboutin, Michael Kors and Oscar de la Renta. Should the Berkeley Hotel be upset by this development and will it be unpalatable to the designers?

Fashionista wonders if these treats, perhaps designed to appease shoppers whose budgets are cut by the credit crunch, will leave the designers flattered or aggrieved. But finding a cause of action and a contingent fee arrangement to go with it may not be that easy!

Saturday, 7 February 2009

Woolworths saved by Shop Direct

Many UK shoppers will be heartened to hear the news that the Woolworths brand is to be given a new lease of life online, after it was acquired by Shop Direct (owner of catalogues Littlewoods, Kays and Great Universal).

The new owners have set up a blog about their new online venture on which they confirm that their new offering, to be launched in summer 2009, will include such Woolies favourites as pick'n mix sweets and Ladybird childrens' clothing.

Fashionista is curious to see whether the brand will be more successful online if the average basket remains as low as that in store.

Thursday, 5 February 2009

What price Duck and Fcuk?

BrandRepublic reports that fashion brand Duck and Cover has opted to harness the power of social networking by launching its own online community The Clan. A digital marketing campaign is now underway on Facebook ('John wrote at 10:28am on January 31st 2009 "Highly under-rated brand Excellent coats and shirts!"' -- nice one, John, says Fashionista) and on YouTube.

Lovely idea, but once you let a brand loose in the social networking environment you are handing over to the mercy of your biggest fans, who are often also your biggest critics and who sometimes get up to all manner of imaginative things online that may not be quite what the brand owner has in mind. What's more, if the social network works it will need some vigorous monitoring/moderation -- which isn't easy -- and if it doesn't work it will look really sad. And just wait till punters who mix-and-match Duck and Cover with French Connection come up with the visually appealing Duck and Fcuk ...

Monday, 2 February 2009

It's my name! Or is it . . . . ?

The AMANDA WAKELEY brand has been sold back to its eponymous designer for an undisclosed sum. Or, to be more precise, a vehicle called AW Atelier set up by the designer Amanda Wakeley, has bought the Amanda Wakeley bridalwear business and all intellectual property relating to the Amanda Wakeley business, which includes the brand name and the autumn 09 collection.

Will this be a happy ending for the designer now that she is re-united with her name and brand? Let's hope so. But the fact is that the courts have been asked more than once to deal with problems arising from the separation of a brand name from its designer. The ELIZABETH EMANUEL dispute even made it all the way to the European Court of Justice in Luxembourg.

Let's hope that Amanda Wakeley will have fewer problems - provided she has a controlling interest in AW Atelier she will be off to a good start and certainly much better placed than when sher had no (or only very little) share in the ownership of the brand.