Ralph & Russo cofounder Tamara Ralph faces a $28.8 million lawsuit following the bankruptcy collapse of her British couture house and its ensuing acquisition, but she denounces the false claims as part of a cleverly orchestrated “smear campaign aimed at destroying my name and my career.”
Allegations in the legal action center on financial mismanagement, including accusations of nonpayment to pension contributions. Ralph claims there’s another part to the story and is more than willing to tell her side “in full.” In the coming weeks, she is expected to submit a response to the suit, which joint administrators Paul Appleton of Begbies Traynor Group and Andrew Andronikou of Quantuma Advisory filed in England’s High Court.
The administrators are trying to uncover what happened to nearly 70 million pounds ($96.8 million) that Ralph & Russo, worn by celebrities from Rihanna and Beyoncé to Meghan Markle and Angelina Jolie, raised between 2009 and 2019 from a third-party investor in hopes of understanding why the firm collapsed and what assets are left to pay creditors. The 11-year-old couturier, which had a brick-and-mortar footprint in London, Paris, Monaco, Dubai and Doha, faced a 28 million pound ($38.7 million) debt load when it fell into administration.
The joint administrators allege that the couture house had been “stripped” of its cash reserves by cofounders Ralph, the creative director, and Michael Russo, who was CEO until last fall when Stefano Biondo was hired to fill the chief executive post. The lawsuit alleged that the cofounders took substantial sums from the company for personal expenses unrelated to the business.
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Russo, who could not be reached for comment, is not a party to the lawsuit, which is seeking damages in the amount of 20.8 million pounds ($28.8 million) and is focusing on Ralph & Russo’s directors and Ralph, based on the grounds that she allegedly did not comply with her responsibilities as a company director. Should the joint administrators prevail, the damages awarded would be used to pay Ralph & Russo’s creditors.
Appleton said in legal documents that the cash depletion left the company “balance sheet insolvent,” and accused Ralph of breaching her agreement with the firm by trying to set up a new enterprise as the bankrupt company was being sold, as well as failing to make pension contributions, according to WWD. He also indicated that others were unsuccessful in their attempts to rein in Ralph’s spending.
Reports in British media said that funds were taken out of staff wages, but allegedly were not passed onto the U.K.’s tax office, the HRMC (Her Majesty’s Revenue & Customs). Administrators confirmed that they had alerted U.K.’s Serious Fraud Office (SFO) about their allegations of financial wrongdoing, including that the “company’s pension pot was raided before it collapsed last March,” according to the Daily Mail. U.K.’s pension regulator, HRMC, was also contacted.
“I would like to make it very clear that I have not been contacted by the SFO nor do I expect to be because I have done nothing wrong,” Ralph said in a statement provided to Sourcing Journal by her spokesman. “The latest attacks on me are demonstrably false claims which are designed to discredit me and stop me speaking out about what really happened at Ralph & Russo.
“There is a smear campaign aimed at destroying my name and my career,” Ralph added. She said that as the label’s creative director, “I raised my concerns about how Ralph & Russo was being financially managed on numerous occasions but was met with abuse and contempt. I did everything in my power to save the company but was hindered at every turn by bullying and intimidation—sadly, these are tactics which will be recognized by many women in the workplace.”
Ralph referenced a resignation letter she sent in May, after a potential buyer for the fashion house dropped out. The missive outlined her many reasons for leaving the business so shareholders and directors would be aware of what happened to her, and that she sent it when she could no longer take the “abuse,” she said. The designer further warned that she would take her case to an employment tribunal if the matter was not resolved.
“This campaign to tarnish my name continues to this day and I am deeply shocked that I am being targeted and held responsible for financial mismanagement that was none of my doing, including allegations about pension payments. The company’s directors and senior management were advised to seek financial and legal advice prior to making payments from Ralph & Russo,” she said. “For now, I am constrained in what I can say publicly but I look forward to telling my story in full. Abuse and victimisation cannot go unpunished and I am ready to stand up for myself.”
Earlier this month, when the joint administrators filed their lawsuit, Ralph said in a statement, “The claims made against me are misconceived and demonstrably false. I am constrained in what I can say about these claims pending my formal response but, if they are not withdrawn, I look forward to responding to and defeating them through the proper legal channels.
“I worked tirelessly over 11 years to build and develop the Ralph & Russo brand and gave my all to the business, its customers and to the team. The last 18 months have been the most difficult of my career, and I believe these ill-founded claims are the latest part of a concerted campaign to bully, silence and coerce me. It is particularly regrettable that this is happening in an industry that champions women’s rights,” she added.
The couture house was dogged by another legal matter earlier this year from minority investor Candy Ventures Sarl, an investment firm run by real estate mogul Nick Candy. The lawsuit involved a dispute over a 17 million pound ($23.5 million) loan to the fashion house. A few days later, Ralph & Russo fell into administration, citing la ack of orders due to the coronavirus pandemic as weddings and red-carpet events were canceled. It was sold in bankruptcy to Retail Ecommerce Ventures (REV), the firm that has been snapping up ailing brick-and-mortar banners like Stein Mart, Lord & Taylor, Pier 1, Modell’s and Linens ‘n’ Things, and giving them a second life in the digital realm.