Fashion designer Karen Millen reveals her pension has been a ‘godsend’ after losing her £40million fortune to bankruptcy as she rents a cottage in Kent while rebuilding her finances
- Fashion guru went bankrupt in 2017 but is rebuilding her finances once more
Fashion designer Karen Millen says she is glad she saved into a pension after taking part of it as a tax-free sum when she went bankrupt.
The clothing genius, 61, praised the retirement fund staple as she spoke about rebuilding her finances after her famous firm went bust.
She lost huge amounts of money during the financial crisis in 2008 when the Icelandic bank Kaupthing collapsed along with large sums it had invested for her.
It sparked a huge legal battle that ended up costing some £3million.
Then she was blindsided with a £6million bill from HMRC over a tax avoidance scheme she had believed was nothing of the sort.
Unable to pay, she went bankrupt in 2017, a decision she said was very difficult to make. It meant she had lost the £40million she had made from her business.
She told This is Money: ‘Deciding to lie down and let it happen to me was the only way I could move on. I’ve never actually added up everything I lost. But I can say that I lost everything that I received from selling my business. I ended up with nothing, except my pension – and that has been my saving grace.
‘Pensions are excluded from a bankrupt’s estate. Mine’s not huge, but it’s been a godsend. I have taken part of it as a tax-free lump sum.
Fashion guru went bankrupt in 2017 but is rebuilding her finances once more after huge tax bill
After going into administration in 2019, the online branch of the business was bought for £18.2 million in August 2019 by Manchester-based company Boohoo
‘I remember thinking, when I was saving into it, that it was irrelevant. Now, I’m pleased I did it. I look at the state pension and think: how do people cope on that? It’s really important to have a private pension. I wish I’d put more in, in hindsight. However, I’m fit and healthy so I’d like to think I can work for at least another ten years.’
After going into administration in 2019, the online branch of the business was bought for £18.2 million in August 2019 by Manchester-based company Boohoo — the online ‘fast-fashion’ outlet for 16 to 25-year-olds, which also owns Coast and PrettyLittleThing.
The buy-out came just two years after Karen had been declared bankrupt in the High Court.
Now she is renting a cottage in Kent and says she has become very hands-on with her money.
She said: ‘I trusted others I felt were better qualified to take care of it. I didn’t get the right advice. Whether it was investments, putting money into offshore accounts, whatever it was, I wish I’d looked into it a little more and taken more responsibility.
‘All of those decisions have cost me. From the time of the financial crash in 2008, there were issues going on with trying to hold on to everything. My time was taken up with negativity, battles and lawyers.
Karen was one of 16 Investitures at Buckingham Palace in Jun 2008 For her services to the fashion industry, getting an OBE
Karen Millen has sold the business, which no longer has a High Street presence, lost the £40 million she made from it, been declared bankrupt and — maybe the biggest insult of all — repeatedly been refused permission to use her own name, or approximations of it, in any retail capacity
‘When I think about the money I spent on legal fees! It was a hole that just seemed to get bigger. And it gave me little time to feel good about myself until I could put it all behind me.’
The tax bill led to her losing her £2.5 million family home, a six-bedroom Grade II-listed building set in five acres in Wateringbury, Kent, which had a swimming pool, lake, cinema and football pitch.
‘We’d lived there for 20 years and I was given a year’s grace — it was a big house to empty — so I was literally driving out of the gates when the receivers turned up to change the locks,’ she recalls, shuddering at the memory.
‘It was an awful time. My children lost their family home. My youngest, who had been two when we moved in, took it hardest.
‘When I heard that Boohoo had bought the company, I was pretty devastated,’ adds Karen. ‘Mainly because it meant the stores would close and something we’d worked for 20-odd years to build would disappear from view.
‘I feared it would be out of sight, out of mind.
‘However, this resurgence has changed my mind. Maybe it is the perfect company to breathe life back into and return the label to where it used to be.’
Karen was declared bankrupt in 2016 and was unable to pay a £6million tax bill. This led to her losing her £2.5 million family home, a six-bedroom Grade II-listed building set in five acres in Wateringbury, Kent
As well as being a favourite of two of Britain’s most high-profile women, actress and model Elizabeth Hurley has launched a curated collection for the brand’s Icons section.
Jill Biden is also a big Karen Millen fan and our own former first lady, Carrie Johnson, rented a black square-necked coat dress by the label for the Queen’s funeral.
‘Karen Millen was always the go-to place for power dressing, clothes that could be worn for work and then glammed up, with jewellery and shoes, for a night out or a special occasion,’ says Karen.
‘We were one of the first big High Street clothing brands to launch in the 1980s, and it saddened me when the stores closed and it faded into the background for a while.
‘It felt like my legacy was vanishing, so it’s great to see people talking about — and wearing — it again.
‘But it’s amazing how many people think I’m still involved with the company after all this time, because it still bears my name.’
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