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J.Mendel in Court Again Over Unpaid Bills

Gilles MendelJ.Mendel presentation, Fall Winter 2017, New York Fashion Week, USA - 15 Feb 2017

Something appears to be up at J.Mendel.

The label, best known for its formal women’s wear and gowns that often appear on red carpets, is in court again for unpaid expenses, this time over a lease it canceled about a year ago, according to Manhattan court records.

In a standard filing of confession, John Georgiades of Stallion Inc., J.Mendel’s majority investor, admitted Monday to owing real estate firm The Arsenal Co. $1.1 million related to the lease of an entire floor in a Midtown building here, where the brand previously kept its headquarters. Georgiades said J.Mendel left the space last year, after signing a 10-year lease in 2013 for the 27,177-square-foot space. Details of the lease terms were not disclosed, but the asking rent at the time was $40 per square foot, putting rent in the range of $1 million.

J.Mendel agreed to pay an early termination fee when it in 2016 approached Arsenal with plans to leave the space. Arsenal agreed to collect the fee in monthly installments of $100,000, but only received four payments, the last of which came in May of last year, leaving Arsenal to pursue legal action.

While the confession did not include any agreement as to how the outstanding amount is to be paid, Georgiades admitting that J.Mendel owes Arsenal likely means some sort of payment is imminent.

Georgiades could not be reached for comment, nor could representatives of J.Mendel and Arsenal.

This isn’t the first time J.Mendel has been accused of failing to pay expenses. Earlier this year, public relations firm Karla Otto sued the brand, claiming the firm was owed $260,000 for its work putting on J.Mendel’s first couture show in July 2016 in Paris. Again, J.Mendel had agreed to pay in monthly installments after being unable to pay the amount in full, but Karla Otto claims to have only received three payments before they stopped altogether. J.Mendel subsequently denied the claims, while alleging the brand was not properly served, which Karla Otto in turn denied.

J.Mendel is also being sued by The New York Times for $28,000 owed for advertising; by DNA Model Management for close to $60,000 in unpaid modeling fees; by Er Fur Trading Corp. for $107,500 in animal fur skins, and by e-commerce platform management company Acadaca LLC for about $60,000.

As of 2015, J.Mendel was said to produce about $30 million a year in sales from its ready-to-wear, including fur, along with couture, bridal and accessories lines. But the brand has not released a couture collection since the Paris show at issue in Karla Otto’s suit, nor does it appear to make accessories any longer.

J.Mendel also operates a stand-alone boutique in Manhattan and sells to high-end department stores Bergdorf Goodman and Harrods. It was headed for a wider expansion in 2013, when it was backed by Los Angeles-based private equity firm Gores Group, but before a full expansion was realized, the firm sold its stake to Stallion after apparently failing to find a partner with which to run the brand.

Its creative head and chief executive officer is Gilles Mendel, a fifth-generation member of the family-run company that started in Russia as a furrier to the aristocracy. He looks to have taken up the role of ceo after the March 2016 departure of Marc Durie, who is now head of men’s shoes at Christian Louboutin in Paris.

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