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House of Taylor crumbling

By Michelle Graff
June 24, 2008

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West Hollywood, Calif.—California-based jewelry company House of Taylor Jewelry Inc. appears to be coming down like a house of cards.

On Tuesday, in a filing with the U.S. Securities and Exchange Commission (SEC), it was revealed that Dame Elizabeth Taylor and supermodel-turned-entrepreneur Kathy Ireland would no longer lend their names, or supply merchandise, to House of Taylor.

The ending of these relationships, the filing states, "will have a material adverse impact on our relationship with our suppliers, retailers and consumers, and it is unlikely that [House of Taylor] can remain in business and may be compelled to liquidate."

The SEC filing shows that on June 20, both Interplanet Productions and Sandbox Jewelry LLC notified House of Taylor that they were terminating their licensing agreements.

Interplanet Productions is the marketing entity through which Taylor brings her line of branded jewelry—sold under the names Elizabeth, ET and House of Taylor—to the marketplace.

Sandbox Jewelry LLC is a subsidiary of Kathy Ireland Worldwide, Ireland's company that includes fashion, home décor, cooking and gardening supplies.

Both companies cite House of Taylor's continuing financial problems as the reason for the termination.

According to the filing, the termination of these licensing agreements also spells the end for the company's use of the name "House of Taylor."

"With the termination of the license agreements, we are obligated to change the name of our business, and we will no longer be able to sell jewelry under the House of Taylor Jewelry brands and designs."

While Ireland and Taylor are pulling out of the business, House of Taylor also is being rocked by inner turmoil.

The company is in default on its loan from New Stream Secured Capital LP, which has "informed [House of Taylor] that it's evaluating all rights and remedies that may be available to it under the loan agreements...including...the right to take possession of all inventory, work in process and all other tangible and intangible collateral."

In the meantime, New Stream has put a squeeze on its cash flow to House of Taylor, and the company is unable to pay the salaries of all employees, including its chief executive officer, according to the filing.

Because of this, on Monday, President and CEO Lyle Rose resigned and the company also terminated five employees.

According to the SEC filing, Rose is seeking severance in the amount of one year's salary, or about $150,000.

Although House of Taylor "has been exploring all funding options," it is not likely the company will be able to receive funding. As a result, the filing reiterates that it is "unlikely [House of Taylor] can remain in business and may be compelled to liquidate."
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