Whatever Happened to Katayone Adeli?

Katayone Adeli Christina Ricci

Photos: Firstview | Getty Images

A look from Katayone Adeli's Fall 2003 collection, and worn by Christina Ricci.

A decade ago, Katayone Adeli was seemingly unstoppable. From 1996 to 2003, she was New York fashion's most prized sartorial enigma, the young independent designer whose impeccably cut, sophisticated wardrobe staples pioneered the next wave of American womenswear.

Adeli's body-skimming trousers earned her a small, devout fashion cult, with swannish cool girls like Gwyneth Paltrow and Christina Ricci proclaiming their love for the label and downtown darlings snapping up her styles in droves.

Even with her legions of fans in high places, Adeli was infamous for her “no hype” policy, eschewing runway shows and traditional advertising in favor of a high-caliber word-of-mouth strategy: Essentially, those with excellent taste discovered the label and introduced it to others.

"They seem to have found me, somehow," Adeli remarked airily to W in 2000, a year with no apparent ceiling in sight for her then three-year-old label.

Time and The Guardian hailed Adeli as the new millennium's leading fashion trailblazer and her pants “the most covetable on earth.” As her main line's price point tipped the four-digit mark, she launched two diffusion lines—2 by Katayone Adeli and 2 Jeans. Meanwhile, Richard Gluckman, the architect behind Helmut Lang's and YSL Homme's flagships, erected her modernist boutique on Manhattan's Bond Street.  

But as former Adeli publicist (and La Garçonne founder) Kris Kim now says, “Sometimes bursting onto the scene so fast can be dangerous.”

Adeli was a classic Roman candle, burning brightly but exceedingly fast. By 2003 it was all over. She closed her label and vanished from public view, leaving in her wake a myriad of frustrating questions.

What went wrong?

Adeli told WWD in 2003 that her business became too popular to keep up, that her still-fledgling company was unable to meet heightened production demands without sacrificing quality.

A simple issue of supply and demand, right? Not quite.

Though her line was carried in 200 retailers—from specialty boutiques to major department stores like Barneys and Harvey Nichols—and made approximately $20 million in its most profitable year (2000), her company's infrastructure was still in its infancy. A meager in-house staff of 27 handled all aspects of the business, attempting to keep all production within Adeli's control. And when it became too much—and working 18-hour days is certainly too much for anyone—she preferred to shutter rather than sacrifice control to outside licensees.

Factors like late vendor payments meant large repercussions for the company. Without available cash, suppliers weren’t paid. Adeli acknowledged that she didn't have the finances to stay afloat, but hinted that she planned to return within a season or so.

That’s just part of the story.

Adeli never relaunched her line. She was reporting an overly optimistic—if not misleading—version of her label's situation to the public. Her troubles far exceeded those she openly recognized: a maelstrom of complex financial and legal woes had been surrounding her company since the turn of the millennium and tax issues were brewing.

After brand co-founder and president Sean Barron left the company in 2000 to start the label Joie, Adeli found a backer in Richard B. Sachs, who made an initial investment in July that year.

As the label expanded, Adeli became increasingly reliant on Sachs’s financial support. In 2002, he invested $315,000 and increased his ownership interest in the label to over 33 percent—but less than a year later, the business relationship soured.

In April 2003—the same month Adeli formally announced her label's collapse—she defaulted on a loan from CIT Group, a major financier of small businesses. That October, in an effort to remedy the situation, Sachs agreed to purchase the $630,000 debt on Adeli's behalf. But two months later, he sued Adeli for that amount, plus fees, for a total of $727,358.52.

Sachs argued that Adeli defrauded him, after learning that in the three years he invested in her, she was not financially solvent and was in fact indebted to the New York State Department of Taxation and Finance for over $140,000.

Reportedly, Adeli’s tax situation developed during the 1999-2000 period—the seemingly profitable era in which Adeli was making $1 million in sales from her vendors.

Here’s where things get confusing: After the New York State Supreme Court denied Sachs’s motion in 2004, an appellate court reversed the decision the following year, essentially allowing him to demand that Adeli pay him the money she supposedly owed.  

Soon, the puzzling situation only grew more desperate: Adeli, under the advice of her lawyers, allegedly made a series of monetary transfers in the first half of 2005, which protected her assets from any “improper” or “unreasonable and unlawful conduct” by Sachs, according to court documents. These transfers allowed her to declare bankruptcy; she formally filed for Chapter 11 reorganization in September that year. (Adeli’s attorneys denied they advised her to make the 2005 transfers.) Come December, Sachs filed adversary proceedings in an attempt to recover his investment.  

Adeli, meanwhile, converted her bankruptcy case to Chapter 7 liquidation in 2006. Two years later, California bankruptcy courts ruled in favor of Adeli, dismissing Sachs’s claim. But Sachs filed an appeal that led to a reversal of that decision in 2009. As it stands, the case will go to New York State Supreme Court in the next seven months.

A source close to Sachs says, “She's [Adeli] been avoiding this case the whole decade. She's going to have to pay.” Adeli, Sachs and Barron would not comment on this story or the current court case.

Though Adeli's name has been a quietly persistent presence on the legal circuit in recent years, her industry legacy is far more ennobling: She'll forever be known as one of the designers we have “loved and lost.”

A short-lived collaboration with 7 for all Mankind jeans—KA7—surfaced in 2006 and served as an attractive anomaly in Adeli's troubled decade. The project allowed Adeli to enjoy a brief resurrection of media buzz, but it only lasted a season.

Lately, though, she's been on people's minds: Trend forecaster Nina Stotler, who sees elements of Adeli's approach in Stella McCartney's work and considers her “draping and take on sheer fabrics” an influence for today's young designers, thinks an Adeli revival would be well received. “A well-cut pair of pants is still a difficult thing to find,” Stotler says.

Terri Gillis, founder of Adeli-friendly boutique TG-170, predicts that if Adeli ever returned, she would sell better than ever. “I'm still wearing her pants!” Gillis says. “We all are.”

Legal troubles not withstanding, Adeli is missed and her name is, and probably always will be, said in the same breath as McCartney, albeit a touch wistfully.