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Handling of Gianfranco Ferré Brand Put Into Question

Men’s Fashion Week kicks off in Milan on Saturday, and one storied name is glaringly missing from the schedule.

MILAN — Men’s Fashion Week kicks off in Milan on Saturday, and one storied name is glaringly missing from the schedule: Gianfranco Ferré.

According to sources, this is merely one more sign of how new owner Paris Group has not been developing the brand since buying Ferré last February. So much so that one well-placed industry source said the three state-appointed administrators who oversaw the sale of Ferré have asked the court of Isernia, Italy, to “conservatively sequester” the brand and its assets to avoid its further impoverishment. Paris Group has filed a counter document and a meeting with the administrators is expected at the end of January.

A legal source said the commissioners opted for this procedure because they believe Paris Group may “finally reduce the brand to a licensed operation in the Middle East. With a request for seizure, they are sending a signal to Paris Group, which they believe has not taken steps to expand the Ferré brand in any way, jeopardizing the entire purpose of the government-backed bankruptcy protection. That was to maintain the company’s employees and develop its business.”

In February last year, Dubai-based Paris Group secured the control of Ferré by presenting an industrial plan that mapped out a relaunch of the brand after two years of state-controlled bankruptcy protection.

“Paris Group wants to move the brand to Dubai, cashing in from it as much as possible, and reducing it to a licensed business,” concurred one Milan-based retailer.

The legal source said a judge could agree to the sequestration “if creditors have sound reasons to believe they will lose all guarantees of recovering their money.”

According to multiple sources, suppliers have been sending grievance letters to the administrators, lamenting missed payments. Upon the sale, Paris Group promised it would take on Ferré’s debt. In October, this totaled around 10 million euros, or $12.7 million at current exchange, but it has not been paid, said these sources.

Federico Piaggi, who with Stefano Citron succeeded former creative directors Tommaso Aquilano and Roberto Rimondi after they were ousted in April, disagreed with the claims and struck a positive note. “We are not showing men’s, because we are focusing on the women’s collection,” he said.

Asked to comment on Paris Group and the way it operates, Piaggi was complimentary and denied there is any delay in the payment of suppliers. “We are working regularly, we are being paid on time and all those who contributed to the show were paid. Suppliers are being paid. How would we be able to work otherwise?” he noted.

Another issue is distribution. In July, the Ferré Milano store on Milan’s tony Via della Spiga was shut down without requesting the necessary approval from the minister, said one source, who also noted that Paris Group quietly terminated the brand in May, with the exception of China.

Indeed, licenses are also a matter of contention, as sources say Paris Group has stalled all development of such agreements.

Retailers, who requested anonymity, said there had been “delays in fall deliveries,” and that no pre-collection for spring 2012 is in the works, which Piaggi denied.

“The Milan store is selling samples and Ferré Milano pieces,” said one retailer with knowledge of the issue. “We are talking about a brand that should rely on the creativity of one or more designers, but there is no input for fall 2012. The label is sadly disappearing from the market.”

Ferré skipped a season of pre-collections last spring, as well as the spring men’s wear season.

Another retailer said “2010 fall stock was shipped to Dubai at discounted prices,” adding that several Ferré franchised stores have been shut down.

The brand remains the main property, which the administrators are trying to safeguard. As reported, in October the commissioners requested a meeting with Italy’s minister of economic development to question the management of the firm so far. The commissioners are charged with monitoring Ferré for 24 months after the sale. Following the meeting, Paris Group said it planned to open three new boutiques in the Middle East by the end of the year and to invest 100 million euros, or $127.2 million at current exchange, in an industrial plan.

Paris Group is owned by Abdulkader Sankari and his son Ahmed, who took on the role of chairman. In October, he fired Ferré’s general director, Michela Piva, succeeding her and other key management figures, from the sales director to the head of communication, without replacing them.

The purchase price for Ferré was never disclosed, but sources estimated Paris Group spent between 10 million and 20 million euros, or $13.5 million and $27.1 million, for the company. The group was founded more than  20 years ago by Sankari and is a fashion distributor and franchisee in the Middle East, where it operates more than 250 stores in the United Arab Emirates, Kuwait and Saudi Arabia.

Designer Gianfranco Ferré died in June 2007. His brand was part of IT Holding SpA, which also controlled Ittierre and Malo, among others.