Buranis arrested over fashion icon demise
Walter and Giovanni 'had financial mania', prosecutor claims
28 July, 18:42
(ANSA) - Milan, July 28 - Two members of the Mariella Burani fashion dynasty were arrested Wednesday as the demise of the once-glorious Italian style icon spurred criminal action.
Walter Burani, who with his wife Mariella built an empire from a 1960s baby-clothes business in the small town of Cavriago near Reggio Emilia, was placed under house arrest in Cavriago.
One of his two sons, Giovanni, was taken to San Vittore prison in Milan.
They are both suspected of bankruptcy fraud and false accounting, and deny wrongdoing.
A Milano preliminary investigations judge, Fabrizio D'Arcangelo, suggested the Buranis had brought the group low through frenzied financial activity that had nothing to do with the core business,
scamming investors and bourse watchdog Consob.
"They had a real financial mania," D'Arcangelo added.
The arrests came after the recent winding-up of the Mariella Burani Fashion Holding (MBFH), which was finalised in April. The liquidation of MBFH came shortly after Walter Burani, his two sons Giovanni and Andrea and another two members of Burani Designer Holding NV (BDH), the Dutch-registered company at the top of the group's pyramid, were placed under investigation for fraudulent bankruptcy.
BRANDS INCLUDED MANDARINA DUCK, ONCE HAD MILA SCHON.
MBFG, which includes brands like Mandarina Duck and produces Vivienne Westwood under license, halted production in February and laid off its over 2,000 employees.
On February 11 a court here declared BDH bankrupt, triggering a domino effect on the whole family group.
Although registered in Amsterdam, the Milan court claimed jurisdiction over BDH because its operating headquarters and books were here at MBFG offices.
In its ruling, the court said it was "totally evident" that BDH was insolvent because it had no means to pay 12.5 million euros in debts towards Deutsche Bank and 700,000 euros in debts towards creditor Natfood Srl, loans which expired on December 31 of 2008.
BDH is said to have debts totalling some 20 million euros, five million euros towards MBFG, which itself has 492 million euros in debt, and the remaining 15 million euros to Deutsche Bank and JP Morgan.
In December Burani Private Holding, one of the family's financial arms, was placed into liquidation after its capital fell below the legal minimum.
Mariella Burani, founded in 1960, was a fast-growing luxury fashion house with double-digit growth over the past decade during which it acquired, and later sold, the historic Milanese luxury brand Mila Schon.
After years of financing its expansion through debt, in 2007 it shifted its focus to its leather goods and fashion jewellery operations, businesses characterised by higher margins, and sold its multibrand and international retail operations to a private equity fund.
