LK Bennett owner Gordon Brothers is set to receive around £3m in consultancy and stock clearance fees following its acquisition of the fashion brand out of administration earlier this year.
New insolvency filings show the payments to the US investment firm amount to more than two-thirds of the £4m it paid to acquire the womenswear business in January, The Times reported.
Gordon Brothers snapped up LK Bennett’s brand and intellectual property assets after the retailer collapsed into administration for the second time in six years.
The deal did not include its physical store estate, which has since been shut, resulting in the loss of around 145 jobs.
Restructuring advisers Alvarez & Marsal are also expected to receive approximately £2.1m in fees for their work on the administration, with hourly rates for some senior staff topping £700.
The substantial professional and consultancy costs come as LK Bennett’s unsecured creditors face heavy losses.
Suppliers, landlords and other unsecured creditors are owed around £34m, while secured lender Secure Trust Bank has recovered the £600,000 it was owed.
Hong Kong-based supplier Ying Ling Kam Trading, meanwhile, is expected to recover only a fraction of its £15.2m claim. HMRC is expected to be repaid in full.
Administrators also processed around £2.4m in customer refunds during the insolvency process.
LK Bennett, founded by Linda Bennett in Wimbledon in 1990, had struggled with changing consumer habits and mounting cost pressures before entering administration.
Gordon Brothers said at the time of its acquisition that it planned to move the brand towards an “asset-light” model, focusing on licensing, wholesale partnerships and international expansion rather than operating a large directly-owned store estate.
The strategy mirrors the approach Gordon Brothers has taken with Laura Ashley, another British heritage brand in its portfolio.
At the time of the deal, Gordon Brothers head of brands Tobias Nanda said the firm planned to take LK Bennett into its “next phase of growth” and expand the label through new retail, licensing and franchise partnerships.
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