SINGAPORE - Local fashionista Tina Tan-Leo is facing breach of fiduciary duty claims filed in the High Court by liquidators of Living The Link, a luxury fashion and lifestyle boutique that went bust in 2008.
At issue is $7.29 million in cash and assets that Ms Tan-Leo, a director of Living The Link, allegedly transferred from the company in 2008 and 2009 when it became apparent that the business was failing, to her two other companies, Alldressedup, one of Singapore's best-known fashion labels, and The Link Boutique, the liquidators alleged in a lawsuit filed last week.
Suresh Nair of Straits Law Practice LLC, a lawyer for Living The Link, which was placed under creditors' voluntary liquidation on May 13, 2010, said in court documents that the liquidators discovered "very substantial intercompany transfers of monies and other assets and the misuse of (the company's) funds" for the personal purposes of Ms Tan-Leo and her husband, Lionel Leo.
Specifically, the liquidators discovered that Living The Link was, between April 2008 and July 2009, paying for the couple's personal expenses, including their credit card bills, which totalled $84,365; and Ms Tan-Leo's American Club bills and Mr Leo's Singapore Island Country Club bills, which totalled $14,070, the suit alleged.
Ms Tan-Leo also authorised the transfer of 120,000 shares that Living The Link held in Graha Lifestyle Pte Ltd to The Link Boutique in April 2009, the suit said.
But Jason Lim of De Souza Lim & Goh LLP and Ms Tan-Leo's lawyer disputed the allegations.
"These claims are misconceived . . . and we will be responding accordingly," he said.
According to the suit, Ms Tan-Leo is a director and shareholder of Fashionation International Pte Ltd, the parent company of Alldressedup, The Link Boutique and Living The Link, which operated a former luxury fashion boutique at No 1 Nassim Road, #02-00.
The three entities are part of a group of related companies called The Link Group.
Alldressedup, which has gained some international prominence, was at the New York and Paris fashion weeks in 2007 and has 63 stockists to its name spread across 20 cities worldwide - including American luxury department store Saks Fifth Avenue and Hong Kong's Lane Crawford.
It has also notched up appearances in international publications such as Harper's Bazaar.
Liquidators Chia Soo Hien and Leow Quek Shiong of BDO LLP are seeking a declaration that Ms Tan-Leo breached her fiduciary duties to Living the Link as well as an order for Alldressedup and The Link Boutique to make full restitution and pay damages.
According to the suit, Ms Tan-Leo transferred from Living the Link inventory valued at $1.29 million in book value, $360,000 in fixed assets and net cash payments of about $3.93 million to The Link Boutique in 2008.
In 2008 and 2009, she also allegedly transferred inventory valued at $1.34 million and cash payments of about $270,000 to Alldressedup, the suit said.
But Ms Tan-Leo, in an examination conducted under the Companies Act by the liquidators on Jan 17 before High Court Assistant Registrar Jeyendran Jeyapal, disputed the allegations, saying "the merchandise belonged to The Link Boutique and Alldressedup", and that Living The Link's assets were "given back" to them as they were "the ones who paid for the inventory and the assets".
In court transcripts, she said her other companies, Alldressedup and The Link Boutique, "had their obligations with the banks; therefore, with the result of Living the Link, we were hoping it would do well but it failed miserably. We decided that the other companies are obliged to pay for the inventory. So we had to give back the inventories to the other companies."
When asked by the liquidators as to why Living the Link paid her American Club bill, Ms Tan-Leo said in court transcripts dated March 26: "Living the Link belongs to me, I am the director."
But the liquidators disagreed, saying in the transcripts: "Living the Link does not belong to you. It belongs to the creditors. Did you pay the American Club bill out of Living the Link because you think it belongs to you?"
"The club membership has been there for a long time, and it is the family agreement that the bills be paid from the companies," Ms Tan-Leo said in court transcripts.
This article was first published in The Business Times.