All that glitters is not gold — even when it comes to Judith Leiber’s iconic handbags.
Two investors in the bejeweled-handbag company claim that it was sold out from under them for only $500,000 — after being worth $60 million just a few years before.
Celebs like Katy Perry, Sarah Jessica Parker and even onetime First Lady Mamie Eisenhower flocked to the famed brand beloved for its quirky blinged bags, which look like anything from cupcakes to cats. They retail for $2,000 to $7,000 at high-end department stores.
Now 92, Leiber sold her namesake company in 1993 for $18 million, and it changed hands again years later.
But the business has now undergone “a wholesale erosion in value,” claim investors Arnold Simon and Timothy Fullum, of Satz International, who were brought in to help sell the brand.
Satz claims the limited partnership in charge of the Leiber company rejected a buyout offer of $66 million in 2006 — only to sell it for less than a half-million dollars earlier this year.
The move “effectively put [Judith Leiber] out of business,” according to a Manhattan Supreme Court lawsuit.
Simon and Fullum claim in court papers that Pegasus Partners, of Cos Cob, Conn., brought them on in 2005 to help manage the day-to-day affairs of Judith Leiber and other holdings and position Leiber for an eventual sale.
The two invested about $4 million of their own money and stood to walk away with a commission of more than $5 million if the business sold for the tens of millions of dollars they expected, they charge in their suit.
But Pegasus misled them, claiming to have invested $50 million in the company when they had put in only $15 million, Simon and Fullum allege.
Pegasus later rejected Simon and Fullum’s advice to sell Judith Leiber to Crown Acquisitions in a 2006 deal that would have ultimately been worth $66 million, they claim.
The big money offer was shot down “with little justification,” Simon and Fullem allege.
Then Pegasus sold Judith Leiber for a pittance to Authentic Brands without telling Simon and Fullum, the two claim.
“This sale was done without [Simon and Fullum’s] consent and approval and resulted in a devastating loss of value,” according to court documents.
Pegasus and Authentic Brands did not respond to requests for comment.