Tory Burch: the fashion designer at the centre of a legal storm

Manhattanite tongues are wagging over the vicious legal wrangling engulfing one of America's most successful fashion labels.

Forget the fiscal cliff. For a certain type of Manhattanite, the more important cliff-hanger this new year was the nail-biting climax of the "Battle of the Burches" the vicious legal wrangle over control of one of America's most successful fashion brands.

After over a year of fighting, the "Bohemian preppy" designer Tory Burch struck a New Year's Day peace deal with her ex-husband, Chris. The resolution of the case, described by one judge as "a drunken WASP fest", will disappoint gossip columnists. But it will be a huge relief for Burch, says Vanity Fair. "The golden girl with the golden brand" was in danger of becoming contaminated by the mud-slinging.

Burch, 46, should be a billionaire by now, says Forbes. The eponymous luxury label she launched in 2004 brought in an estimated $800m last year; and a successful float would easily have landed her within the Forbes 400.

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But standing in the way was her former husband and business partner who, she maintains, tried to sabotage her sales by starting "a cheaper Tory-like brand" of his own, using "inside information" gleaned from spying on her operation (see below).

Chris Burch tells a different story, says The New York Times. Far from "wasting the company's time, money and energy", as she alleges, he insists he was "the business brains behind her brand".

Dissecting one of the "oddest ex-spousal relationships in New York society" is all the more intriguing because, "on paper, Tory and Chris were perfect for each other", says Vanity Fair. Both grew up in Waspy Philadelphian households and "both left for the high life of New York where they were propelled to fame and fortune by outsized ambition".

Tory got into fashion via PR: she joined Zoran and Ralph Lauren, eventually rising to become head of PR at Vera Wang. Chris Burch cut his teeth in the rag trade at the sharp end: launching a preppy sportswear chain called Eagle's Eye in the 1970s, which was eventually sold for $60m in 1990.

The couple met on a trip to the Hamptons. "I thought she was as cute as a button," recalls Chris. They married in 1997 and brought up six children (three from his first marriage) in opulent style at their apartment in New York's Pierre hotel.

When Tory launched her own fashion line in 2003, Chris invested $2m. "I was like, whatever, honey, I'm never going to see this money again'." Yet the venture was almost immediately successful.

Despite having no design training, Tory had a knack for creating an "uptown" look "in an interesting, mix-and-match downtown way" and the couple read the market perfectly. "The fashion world was hungry for luxury brands at mid-price points." Tory Burch filled the gap.

Yet by 2006, when the blockbuster Reva ballet flats (named after Tory's mother and fashion inspiration) were launched, the marriage was on the rocks. Hopefully, this week's deal will ensure their commercial baby avoids a similar fate.

Who will win the Battle of the Burches?

The question at the heart of the Tory Burch "ex factor" row is whether her success is thanks to, or in spite of, her former husband. Is she a design and retail genius in her own right, or a socialite dilettante who just got lucky?

"There were a lot of raised eyebrows when I started this company," Burch recalls. "Many thought it was a vanity project." But the brand's explosive success has "stifled the accusations of dilettantism", says Cotten Timberlake in Businessweek. Certainly, the New York fashion police are squarely behind her.

"It's always been, as far as we're concerned, 100% Tory's business," pronounces Vogue editor Anna Wintour. "We've never had anything to do with Chris."

In person, Tory Burch is "annoyingly close to perfect someone it would be nice to dislike if she were only dislikeable", says Daphne Merkin in The New York Times. How infuriating for Chris Burch, whose attempts to portray her as unreasonable largely fell on deaf ears.

To her friends, the shop design and contents of Burch's new venture, C. Wonder, are blatant "knock-offs" made all the more underhand because of his continued presence on Tory Burch's board and 28% stake in the business.

One told Vanity Fair: "He's mad as hell that she's as successful and powerful as she is. It's time for him to sell his shares and get out of her life."

"Tory Burch didn't invent the cardigan sweater or the ballet flat C. Wonder has the same right to these timeless and basic elements as every other brand," retort Chris Burch's lawyers. Still, the deal which sees two new backers take minority stakes fuels hopes of an end to the impasse.

A 2013 initial public offering may yet be on the cards for Tory Burch. Could it fly? The brand has much goodwill, but some wonder whether the damage has already been done. C. Wonder "is a competitor at a lower price point with an owner who essentially has the same trade secrets", notes one fashion industry lawyer.

Far from being done and dusted, the Battle of the Burches may have just begun.