Claudia: All that glitters...

Feb. 15: Elite Model Management of New York, the agency that launched the careers of Naomi Campbell, Claudia Schiffer, Cindy Crawford, Linda Evangelista and Heidi Klum, is on the brink of collapse.

In a move that will send a shudder through the world’s most glamorous industry, the agency has filed for protection against bankruptcy in a final attempt to prevent it from going out of business.

Elite Model Management has been the leader in the modelling business for more than 30 years, reaching the height of its fame in the late 1980s and 1990s: a time when leading “supermodels” were in such demand that Evangelista famously said she “would not get out of bed for less than $10,000”.

Now, however, the Manhattan agency has entered a dark chapter in its history: partly as a result of changing times and growing rivalries, but most obviously because it is under sustained legal siege.

The biggest single case is also the most bizarre. Victoria Gallegos, a former sales director, parted company with Elite after just seven weeks, arguing that she was a victim of passive smoking and the butt of a series of malicious practical jokes. She won $5.2 million, reduced on appeal to $4.3 million, but the case rumbles on.

At the same time, a long-running class action, brought by a group of disgruntled former models, is working its way through the New York court system.

The suit, directed not only at Elite, but at other leading agencies, including Ford Models and Next Model Management, alleges that the agencies fixed their commission on models’ earnings at 20 per cent — twice the level allowed by state law for employment agencies.

Elite has seen its revenues plummet as a result of the harsh business climate and legal actions. It was said recently to have just $4.5 million in assets, against $7 million in liabilities.

According to fashion observers in London, Elite and some other of the large agencies with hundreds of women on their books have also become, as it were, unfashionable.

Many leading models now prefer the “personal touch” and are working for the smaller, elite “boutique” agencies, which often look after fewer than 20 models.

Harriet Close, the proprietor of the Close Management agency in London and a former model, said yesterday that she was shocked by the news. “Times are very tough for our business. It’s fiercely competitive out there and many of the big customers are being forced to cut back on their budgets.”

Last week, Elite filed a petition under Chapter 11 of the US Bankruptcy Code to restructure its business and protect it from creditors.

Some of the biggest names in America’s corporate establishment have at various times resorted to Chapter 11, which keeps creditors at bay while the stricken company, under legal supervision, rebuilds and regroups — if it can. The move does not affect the parent company in Switzerland or any of its affiliates, including Elite Management of London.

Elite Model Management of New York and its co-defendants in the class action by former models vigorously deny that they have behaved unreasonably, insisting that they have always played fair.

Edward Curtin, a lawyer for the Manhattan company, told the Wall Street Journal that the suggestion that his clients were “gouging” or short-changing models was ludicrous, because modelling was one of the most ferociously competitive businesses in New York.