Harold Tillman calls for US-style laws on bankruptcy
The fashion industry grandee Harold Tillman will call for a sweeping shake-up of British bankruptcy law at a meeting with ministers next week in the wake of his ousting from the fashion house Jaeger.
The retailer's former chairman, Mr Tillman lost control of the business when its debt was sold to Jon Moulton's Better Capital by Lloyds Banking Group in 2012.
Mr Tillman wants beleaguered businesses to be able to seek protection from creditors along the lines of US Chapter 11 bankruptcy, which allows company bosses to restructure their businesses or find rescuers under court supervision.
He believes this would have afforded him sufficient time to effect a rescue of Jaeger, which was struggling at the time after sales were badly hit by a mild winter, and pay off its debts.
Mr Tillman said he was furious at the bank's actions, claiming the sale was handled behind his back while he was on holiday. He said he jetted back as soon as he heard it was under way, but was too late to prevent it.
A former chairman of the British Fashion council, Mr Tillman also said he was considering launching private prosecutions of some of those involved in Jaeger's plunge into administration.
He is arguably the highest-profile businessman to enter the debate that is raging over the way banks handle crisis-hit companies in the wake of the government adviser Lawrence Tomlinson's report into the activities of Royal Bank of Scotland's Global Reconstruction Group (GRG). The incendiary report alleged that GRG had pushed viable businesses into bankruptcy. GRG is now the subject of an inquiry by the Financial Conduct Authority.
Lloyds said it did everything it could, and that Better Capital was brought into the transaction by Jaeger's board. The private-equity firm ultimately restructured the fashion house, which continues to trade as part of its fund portfolio.
Mr Tillman, however, said he had secured a meeting with Sajid Javid, the former investment banker turned Treasury minister, and would highlight the case as evidence of the need for a shake-up of bankruptcy laws.
He said: "What happens now is that you are rendered powerless, out of work. Investment in your business and your life is taken away and the vultures come along and pick up whatever they can from the administrators …
"There are businesses that could be trading on the high street now if we had something like US-style Chapter 11. Ireland has adopted something similar. Why not us?"
Mr Tillman said the retail trade was particularly vulnerable to banks calling in loans because trading can be choppy. A bad quarter can put chains in breach of covenants, which can give banks an excuse.
A Lloyds spokesman said: "Whenever a customer is in financial difficulty, the group tries to support the customer to place it on to a sounder financial footing.
"Better Capital was brought into this transaction by the board of Jaeger Group. The sale of the debt was consented to by the board of Jaeger Group. Better Capital's investment – and doing so in a short timeframe – secured the company's financial future, safeguarding many hundreds of jobs as a result."
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