Designer Karen Millen is to begin the fight to trade under her own name.

Millen is also pursuing legal action against the estate of Kaupthing for the way in which she lost her near 7% interest in Karen Millen owner Mosaic Fashions, now Aurora, when the bank went bust in 2008

Millen, who set-up the Karen Millen label with ex-husband, All Saints co-founder Kevin Stanford, in 1983, faces breaking a trademark infringement if she begins trading under the name Karen or KM as planned. However Millen said she will fight any dispute.

The pair sold down their interest in Karen Millen to Icelandic investment group Baugur. By 2008, a complex series of deals left Stanford with a 8% stake in Baugur and a 4% stake in Kaupthing. Both collapsed in 2008.

The designer was interviewed this month by Icelandic investigators looking into allegations that Kaupthing manipulated the market and hid toxic investments. She and Stanford are seeking £500m from Kauphthing’s estate via a series of legal claims.

Millen told the Guardian: “In my opinion it is wrong that a bank can pretend to have money and security which it doesn’t have, generate a false balance sheet and use its own customers to fund acquisition ambitions. This is wrong and I am not going to rest until I have my company restored to me.”

This time last year Stanford claimed that Kaupthing operated a scheme to prop up its shares for at least a year before it hit the buffers in October 2008.

In a letter written in March 2011 Stanford alleged that British savings made through online savings account Kaupthing Edge were funnelled to the bank’s wealthiest customers on condition they used the cash to buy shares in the bank.

Stanford said that cash raised as deposits by British savers was swapped for loans held by its Icelandic parent company. The cash was passed to a Luxembourg subsidiary where it was used to fund the share purchase.

The scheme allowed Kaupthing to stave off rumours about its financial health and to allow Kaupthing executives to sell some of their own shares in the bank, said Stanford.