€8m debt that shut Orla Kiely style retail empire

Designer hit by downturn

SHE was the fashion favourite of royalty and celebrities but now a new report sheds light on how Orla Kiely’s retail fashion empire collapsed.

The Dubliner, known as the Queen of Prints, shocked the world of style when her in-demand business was forced into administration three months ago, leaving debts of more than £7.25million (€8.1million).

And it has emerged that it was her ordinary customers’ loss of buying power, more than anything else, that led to the decline. For almost two decades the up-market designer had been helped in no small way by Kate Middleton, who has worn her distinctive print coats on a number of occasions.

Other celebrity fans included Lena Dunham, the creator of the TV series Girls, and actors Keira Knightley, Kirsten Dunst and Zooey Deschanel.

However, in September, the announcement that Ms Kiely’s retail business had shut down with the loss of 48 jobs here and in the UK sent shockwaves across the fashion and retail worlds, although it said the home and design licensing business would not be affected. The new 60-page report by the administrators, that has just been lodged with Companies House in the UK, notes that while the business traded profitably and enjoyed many years of success and a strong brand from the year 2000, it began to experience difficulties in recent years ‘due to the downturn in the fortunes of retail customers in the current trading conditions’.

Employees and other unsecured creditors owed £5million will be left empty handed, according to the report.

Staff are owed £217,830, Metro bank is owed £2.2million, the Irish tax authorities are owed €100,000 and British tax authorities are owed £567,000.

When former employees are included, the amount owed to people who worked at the company amounts to £315,243.

Administrators Chris Newell and Simon Bonney estimated that the total loss in the business amounts to £7.5million.

The most recent accounts for the 12 months to the end of March last year had showed that the business had recorded earnings of £322,551 as revenues climbed by 16% to £8.3million.

However, a new finance director was appointed in July ‘following which a number of issues were highlighted with the company’s finances’.

The administrators said that when the new finance director highlighted the company’s financial difficulties, the directors – Orla Kiely and her husband Dermott Rowan – sought advice from an expert who suggested that the business should be closed down and placed into voluntary liquidation.

Metro Bank plc then placed the company in administration.

The administrators said that due to a lack of working capital and the fact that trading had stopped they didn’t think it was possible to restructure the existing business. They also said that they don’t believe the ordinary, unsecured creditors will receive a payment, while 70p will be paid for every £1 owed to preferential creditors. In their report dated November 14, the administrators stated that Ms Kiely and Mr Rowan have not, to date, submitted a signed Statement of Affairs but they are in the process of drafting this and the forms are expected shortly.

Total payments will depend on the sale of ‘Goodwill’ or intellectual property rights attached to the Orla Kiely brand held personally by the company directors, Ms Kiely and Mr Rowan.

‘Any opportunity to agree a deal to sell any goodwill held, will require the co-operation of the directors. The expected-to-realise amount for goodwill is therefore uncertain,’ it said.

The list of unsecured creditors show £2million is owed to ‘trade and expense creditors’ and £1million to Ms Kiely and Mr Rowan.

‘Drop in fortunes of retail customers’ Kate and Keira were fans