general director and board member Cristiana Ruella told a court yesterday that the reason that the label's signature and D&G lines were sold to a separate firm was because it was deemed "a serious weakness" to leave the business solely in the control of the designer duo. Italian authorities believe that the 2004 sale to Luxembourg-based holding company Gado Srl was a means of evading Italy's high taxes - an allegation the duo are currently charged with.
"Banks, suppliers, licensees, nobody saw the fact that the brands were owned by the designers in a favourable light," said Ruella. "We had passive royalties that we paid to the owners of the brands and I was constantly told that banks did not want to finance such a company. We needed to have access to credit to develop and compete with big brands."
She added that the brand considered a number of interested parties, before choosing Gado. L Capital, the investment fund run by LVMH, and Holding di Partecipazioni Industriali were both ruled out, after it was made clear that the deals "could have taken place only if the brands belonged to the company". PPR (now known as Kering), was another option, but that too was dismissed because Gucci wanted to buy the label in its entirety. Ruella also stated that the designers were not part of the finer details of the final sale.
"They were the ones who decided to sell the brand but they were not aware of the operations," she said, reportsWWD. "They deal with creativity."
The trial continues in Milan, with further hearings scheduled for May 3, 15 and 29.
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