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The luxury fashion industry has faced many of the same challenges this year as other industries, including dealing with inflation, rising interest rates, and the lingering effects of the COVID-19 pandemic.
Retail companies also dealt with other issues that created financial distress that other service industries did not face, such as maintaining the relevance of their brick-and-mortar locations and fighting shrinkage, known as retail theft.
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The luxury fashion sector suffered a loss earlier this year as sales of high-end clothing chains declined. Ted Baker CanadaTed Baker, which operates 31 Ted Baker stores in the United States and 25 stores in Canada, along with eight Brooks Brothers Canada stores and seven Lucky Brand Canada stores, announced in April that it had filed for restructuring under Canada’s Corporate Creditors Arrangements Act and Chapter 15 bankruptcy to liquidate and close all of its North American stores.
also, Anne Fontaine United StatesThe Luxembourg subsidiary of the Paris-based luxury department store chain filed for Chapter 11, Subchapter 5 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York on Jan. 16 to reorganize, claiming the company has been unable to recover from the financial distress caused by the Covid-19 pandemic.
Anne Fontaine operates 17 luxury store locations in the United States, 19 in Europe, three in the Middle East and three in Asia, according to its website.
Image source: Getty Images
McMullen files for Chapter 11 bankruptcy
Now, luxury fashion retailer McMullen filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Northern District of California on August 21, reportedly facing a lawsuit from online rival Moda Operandi over alleged copyright infringement.
The Oakland, California-based debtor listed assets ranging from $500,000 to $1 million and liabilities ranging from $1 million to $10 million in his petition and indicated that the funds would be available to unsecured creditors.
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The debtor filed his petition about two weeks after luxury fashion retailer Moda Operandi filed a lawsuit against McMullen in the U.S. District Court for the Northern District of California, accusing him of copyright infringement for using images of copyrighted products without the company’s consent.
The Brooklyn, New York-based luxury clothing retailer filed its complaint on Aug. 7, alleging that McMullen “committed copyright infringement with actual or constructive knowledge, or with reckless disregard or willful blindness of Moda Operandi’s rights in the[images]such that the copyright infringement acts in question were willful,” the Sourcing Journal reported.
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The plaintiff attached to her complaint 19 copyrighted images, showing skirts, dresses, blouses, pants and jackets, along with screenshots that she claims came from McMullen’s website. Moda Operandi believes that the images McMullen used were identical or nearly identical to her own.
Moda Operandi is seeking damages at trial. The plaintiff has requested an injunction preventing McMullen from using the 19 images without the plaintiff’s permission.
All lawsuits against McMullen are subject to an automatic stay while the debtor’s Chapter 11 case continues.
McMullen, founded by Sherry McMullen in 2007, has received acclaim from fashion magazines such as Vogue, Women’s Wear Daily and Harper’s Bazaar, according to its website.
The store carries luxury womenswear from brands such as Christopher John Rogers, Dries Van Noten, The Row, Aisling Camps and Diotima. It also carries a range of luxury menswear from Dries Van Noten.
In addition to its flagship store in Oakland, McMullen opened a second store in San Francisco’s Presidio Heights neighborhood on August 12. The fashion retailer also operates an e-commerce platform on its website.
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