The reason behind the collapse of the Orla Kiely empire A costly and disastrous plan to open a New York store contributed to the collapse of the Orla Kiely retail fashion retail empire.
According to the administrators of Ms Kiely’s fashion clothing business, plans by Orla Kiely to expand her business in the US brought down her company.
The Orla Kiely Partnership was formed in 1997
The collapse of Kiely Rowan accumulated debts of over €8 million euro back in September 2018. This created panic across other parts of the fashion and retail sector as this established business had reported solid profits for the previous year.
A second progress report released by joint administrator Chris Newell has shined some light on the exact reason behind the collapse of the fashion empire.
As part of a new report recorded with Companies House in the United Kingdom, Mr Newell states “part of the explanation for the failure of the business appears to be the amounts utilised to fund the business in the US entity.”
“It appears that the opening of a new shop in New York created a drain on the cash flow, causing the requirement for additional borrowing which eventually led to the collapse of the whole group.
“Investigations into this matter and the actions of the directors in funding the US project to the detriment of the remainder of the group is currently ongoing.”
Orla Kiely was famous for her accessory fashion designs
Orla and her husband, Dermott Rowan have been listed as directors of the company at the time of its collapse. Mr Newell’s progress report also makes worrying reading for creditors of the firm.
He says that secured creditor Metro Bank was owed over €2 million at the time of the collapse and stated that it is very unlikely they will ever see any full return on their investment.
Mr Newell claims that unsecured creditors were estimated to be owed over €6 million. In a directors’ statement of affairs of the company, he reports to date , 86 claims have been received from unsecured dividends totalling nearly €5 million
His report also claims that over €100,000 is still owed to tax and customs in Ireland.
His report concluded that it is feasible that some type of dividend will be given to preferential creditors. The exact amount will depend on the realisations and costs. Orla Kiely still operates a separate licensing business.
The reason behind the collapse of the Orla Kiely empire