University May Lose In $20M Holding

A failed fashion design company in which the University held a controlling interest was forced into liquidation earlier this week, leaving the status of a $20 million investment uncertain.

The Harvard Private Capital Fund (HPC) owned 82 percent of the now-defunct Collection Clothing Corporation (CCC). HPC is a wholly-owned high-risk subsidiary of the Harvard Management Company (HMC), which manages the University's approximately $6 billion endowment.

CCC was a holding company formed to hold the license of Colours by Alexander Julian. Colours is a line of low-end apparel sold in department stores that has been around for over twenty years.

Harvard became an investor in the late 1980s.

It is not clear exactly what the financial effect on the University will be, but it will almost definitely entail some loss, according to a former high-ranking executive of the CCC.

In a liquidation, the various parts of a company are sold off, and the amount recovered allows some of the investment to be recouped by the stockholders. But the process of liquidating assets can take months or longer.

HMC President Jack R. Meyer had no comment on anything to do with the liquidation.

Sources say the HMC manager directly responsible for the account was N'Kere Udofia. Udofia did not return phone calls yesterday.

The liquidation, which employees found out about on Sunday night, occurred afterfour months of negotiations between CCC, AlexanderJulian, HMC and the Bank of New York, which holdsthe debt on the company, according to thehigh-ranking executive.

"There was an agreement, but something changedat the last minute," the former executive said."HMC was trying to recoup as much as possible andI think they were pushing to liquidate. In the endthere was a forced liquidation by the bank."

Sources familiar with the company say it hadvery high costs and Julian in the end refused tomake changes to cut down on the firms' lavishexpenses. As a result an agreement could not bereached to save the firm.

Julian also own a high-end fashion line andclaims he will be able to find another licenseefor his sportswear, sources said.

But the former executive said there was verylittle chance for Julian's recovery because thehigh-end line does not bring in much revenue andfirms will not be quick to pick up a license aftera company has been liquidated.

Julian has no way to support the staff he hopesto keep on at the company, the executive said.

The executive also said Julian is not a viableplayer in the fashion industry at this pointbecause he has "a lot of debts outstanding whichdamage his credibility."

As an example, the former employee said themodels at Julian's last fashion show had not beenpaid. "No model will ever work for him againunless those debts are paid," the executive said.

When the company was faltering last year, TerryPillow, a former head of American business forArmani Exchange, was brought in to try to turn itaround.

Pillow, who sources say is quite respected inthe industry, did not want to go into Chapter 11,let alone liquidate, and fought it every step ofthe was, according to the executive. Somespeculate he would have been more successful ifJulian were more flexible.

Pillow was out of state and could not bereached for comment.

Sources familiar with the original investmentmade in the late 1980s said it had only recentlyturned bad. One blamed the wide-spread troubles ofthe clothing industry along with the hugeadvertising campaign launched by its majorcompetitor in the last few years.

But another source said there was no apparentreason for the company's collapse.

"The business appeared to be thriving," saidthe source, who is familiar with HMC. "To behonest the liquidation is pretty shocking. I couldspeculate on reasons why, but I really have noidea."

Calls made yesterday to both Colours and CCCwere received by an answering machine from theColours company. The message simply said no onewas in the office.

But according to the New York Times, theoffices have already begun to be dismantled

"There was an agreement, but something changedat the last minute," the former executive said."HMC was trying to recoup as much as possible andI think they were pushing to liquidate. In the endthere was a forced liquidation by the bank."

Sources familiar with the company say it hadvery high costs and Julian in the end refused tomake changes to cut down on the firms' lavishexpenses. As a result an agreement could not bereached to save the firm.

Julian also own a high-end fashion line andclaims he will be able to find another licenseefor his sportswear, sources said.

But the former executive said there was verylittle chance for Julian's recovery because thehigh-end line does not bring in much revenue andfirms will not be quick to pick up a license aftera company has been liquidated.

Julian has no way to support the staff he hopesto keep on at the company, the executive said.

The executive also said Julian is not a viableplayer in the fashion industry at this pointbecause he has "a lot of debts outstanding whichdamage his credibility."

As an example, the former employee said themodels at Julian's last fashion show had not beenpaid. "No model will ever work for him againunless those debts are paid," the executive said.

When the company was faltering last year, TerryPillow, a former head of American business forArmani Exchange, was brought in to try to turn itaround.

Pillow, who sources say is quite respected inthe industry, did not want to go into Chapter 11,let alone liquidate, and fought it every step ofthe was, according to the executive. Somespeculate he would have been more successful ifJulian were more flexible.

Pillow was out of state and could not bereached for comment.

Sources familiar with the original investmentmade in the late 1980s said it had only recentlyturned bad. One blamed the wide-spread troubles ofthe clothing industry along with the hugeadvertising campaign launched by its majorcompetitor in the last few years.

But another source said there was no apparentreason for the company's collapse.

"The business appeared to be thriving," saidthe source, who is familiar with HMC. "To behonest the liquidation is pretty shocking. I couldspeculate on reasons why, but I really have noidea."

Calls made yesterday to both Colours and CCCwere received by an answering machine from theColours company. The message simply said no onewas in the office.

But according to the New York Times, theoffices have already begun to be dismantled