Ralph & Russo collapse draws scrutiny of pensions watchdog
Written by Hit Music Radio News on 09/07/2021
Pension watchdogs are scrutinising the collapse of Ralph & Russo, the upmarket British-based fashion brand which is now at the centre of a legal fight.
Sky News understands that The Pensions Regulator is examining the treatment of the company’s retirement scheme in the period before administrators were called in in March.
The status of the regulator’s work was unclear on Friday, although sources said its work had got underway recently.
Ralph & Russo, which was sold last week by its joint administrators to Retail Ecommerce Ventures (REV), a US-based investment vehicle, is best-known for having designed the Duchess of Sussex’s £56,000 engagement dress.
It collapsed after running out of cash, with the business failing to make a number of salary payments and staff pension contributions in the months prior to its insolvency.
The Pensions Regulator, which has a wide range of enforcement powers, said in a statement that it did not comment on “individual schemes or employers”.
“Where a company has become insolvent we will work with relevant third parties, such as insolvency practitioners, the Insolvency & Redundancy Payment Services and the pension scheme provider in our role to protect savers,” it added.
“We have no further comment.”
Administrators from Begbies Traynor and Quantuma have launched a High Court action against Tamara Ralph, the brand’s co-founder, alleging that she and business partner Michael Russo extracted substantial sums of money from the company.
In the particulars of claim, a legal document which sets out the basis of their case, the joint administrators alleged that from October 2020 until March this year, the company “failed to make any pension contributions to Aviva, the company’s pension trustee… notwithstanding the fact that employee contributions were deducted automatically from the employees’ monthly salary via the company’s payroll and PAYE mechanisms”.
The documents assert that “approximately £176,000 was appropriated and/or diverted from the company pension scheme”.
In a statement on Friday, a spokesman for Ms Ralph said that she “has not been involved in any wrongdoing”.
The spokesman added that “along with the company’s directors and c-suite [top executive] staff were advised to seek financial and legal advice prior to making any payments from Ralph & Russo”.
“Ms Ralph was off on maternity leave at the time but the directors followed the advice of their legal and financial advisors on all payments.
“One of the advisors dealing with the financial decisions was Andrew Andronikou of the firm Quantuma [who] subsequently became one of the joint administrators.
“The advice from Andrew and Quantuma was followed completely.”
Ms Ralph had previously denounced the claims against her in the court action as “misconceived and demonstrably false”.
A spokesman for the joint administrators said: “We have a statutory duty to investigate the affairs of the company, the conduct of the directors and any shadow directors and, in particular, in relation to the £60m invested into the company and spent by the founder directors at the expense of the pension regulator, HMRC, secured, preferential and unsecured creditors.
“We are continuing our enquiries in that regard.”
The rescue of R&R by REV – which was set up by Tai Lopez and Alex Mehr, two entrepreneurs – follows the injection of tens of millions of pounds in funding into Ralph & Russo from the likes of Candy Ventures, the vehicle of entrepreneur Nick Candy, and John Caudwell, the billionaire founder of the Phones 4U retail chain.
Tennor Holding, the owner of the La Perla lingerie brand and investment vehicle of financier Lars Windhorst, invested roughly £40m in return for a minority stake in Ralph & Russo in 2019 which valued it at approximately £175m.
The fashion house, which specializes in haute couture and ready-to-wear clothing and luxury goods, has notched a number of notable achievements during its brief history.
In 2014, it was the first British designer in nearly a century to be accredited by the French body which decides which fashion labels can officially be designated haute couture.
It sprang to global prominence in 2017 when Meghan Markle wore one of the designer’s dresses in her engagement photographs.
Ralph & Russo’s celebrity customers are also reported to include Beyonce, Angelina Jolie and Gwyneth Paltrow.
Its average client spends £50,000 per transaction, and it has opened boutiques in Doha, Dubai and Monaco.
The company also operates from locations in London’s Mayfair and New York’s Fifth Avenue, befitting its internationally renowned designs.
Its journey into choppy legal and financial waters was partly triggered by the pandemic’s impact on its business, with a dearth of red carpet events – one of the mainstays of the haute couture industry – hitting demand for Ralph & Russo’s dresses.
© Sky News 2020