Elite Model Management (NY): From Beauty to Bankruptcy
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Code : FMB0001
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Region : USA
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Introduction: EliteModelManagement is the largestmodeling network agency in the world1 with a network of 33 subsidiaries and affiliate firms globally and 750 fashionmodels associated with it. In February 2004, the agency announced that one of its affiliates, the ‘Elite Model Management Corp.’ of New York (Elite NY), had filed a petition under Chapter 11 of the U.S. Bankruptcy Code to restructure its business. Themajor reason for the bankruptcy petition had been several lawsuits filed againstEliteNY. In June 2002, a ‘class action suit’2 was filed against the New Yorkmodel agencies, which included Elite NY along with 12 other agencies on the charges of price fixation. By April 2004, EliteNY had spent about $1.5million3 in legal fees to defend itself.Then, came another lawsuit in 2002 against the founder ofEliteModelManagement, JohnCasablancas, in which itwas alleged that he had sexually abused a 15-year-oldmodel in 1988. And, the suit filed by Victoria Gallegos, a former executive trainee, over hostile working environment, sounded the death-knell for the agency. In 2003, the jury orderedElite NY to pay a compensation of $5.3million4 to Victoria Gallegos, which was later reduced to $4.2 million. Elite NY’s appeal is still pending in the higher court.Meanwhile, the firmfiled a bankruptcy petition to protect itself fromthe lawsuits. EliteNYwas reported to possess $4.5million in assets against $7million in liabilities.5 Experts opined that Elite NY’s filing for bankruptcy might give enough cushion for a comeback to the prestigious concern, which has been associated with supermodels like Cindy Crawford, Naomi Campbell and Linda Evangelista, with Lauren Bush, niece of the US President GeorgeW. Bush, and Paulina Porizkova still on its list.
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