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Phillips Nizer Press Release

FOR IMMEDIATE RELEASE
May 23, 2005
Contact: Vikki Grodner
(212) 841-0703
vgrodner@phillipsnizer.com

PHILLIPS NIZER FILES SUIT ON BEHALF OF CLIENT AGAINST SAKS
FOR IMPROPER AND INFLATED CHARGEBACKS

NEW YORK – Phillips Nizer LLP has filed suit on behalf of International Design Concepts LLC (IDC) against luxury retailer Saks Inc.  Litigation partner and lead attorney on the case,
Donald L. Kreindler, is representing IDC, which purchased the assets of Apparel Group International (AGI), a clothing manufacturer with a license to make Oscar de la Renta clothing for Saks and other retailers.  In the suit, IDC asserts that the excessive chargebacks for markdown allowances, amounting to over $31 million and representing about 35% of the sales price (not including millions of dollars of other chargebacks for purported non-conformities), contributed to the ultimate dissolution of the company since AGI could not afford to pay its licensing fees.  Consequently, AGI lost its only source of revenue—the de la Renta license—and the company was forced to close.  The practice of improper chargebacks imposed upon vendors, such as AGI, is currently the subject of formal investigations by both the Securities and Exchange Commission and the United States Attorney’s Office in Manhattan.  Saks Inc. has admitted it had improperly collected vendor markdowns of $21.5 million and has terminated several senior-level executives and numerous merchandisers.

“The excessive chargebacks exacted by retailers from their vendors has been a problem for many years, and it has become increasingly onerous in recent years” Mr. Kreindler said.  “We hope this will be the beginning of action that will create a more level playing field.” 

On Thursday, May 19, Donald Kreindler, Arthur Bargonetti, former President of Operations for a leading sportswear brand, Saul Berkowitz, Managing Director at American Express Tax & Business Services and Allan Ellinger, Senior Managing Director at the Marketing Management Group, Inc., led a panel discussion regarding the issue of chargebacks and the vendor-retailer relationship. The program, at the Princeton Club in New York City, was presented to a packed audience of vendors, designers and financial executives. 

Donald L. Kreindler is a senior partner at Phillips Nizer LLP.  He specializes in the resolution of business disputes - by negotiation where possible, and otherwise through trial.  Mr. Kreindler has lectured and written extensively on Arbitration, Trial Practice, Copyright and Trademark Law, and the Uniform Commercial Code.

Phillips Nizer LLP has been engaged in a wide-ranging practice of domestic and international law for over 75 years.  Established by world-renowned trial attorney Louis Nizer, the firm today consists of lawyers who are well-respected and recognized in their fields.  The firm’s principal office is in New York City, with additional offices in Garden City, Long Island and Hackensack, New Jersey.

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