Bad news for fans of highly unwearable, commercially unviable (but superfun!) clothing label Heatherette: We hear from a source close to the designers that the company, known for featuring celebrity models and throwing perhaps the most raucous show during fashion week, has quietly gone out of business.

The demise of Heatherette has been months in the making. The label actually canceled their fashion week show in February, though founder Traver Rains claimed at the time that he and partner Richie Rich were simply reorganizing the company and would be back in time for next fashion week. The reorganization was supposed to involve finding a new financial backer after Rich and Rains burned through the $6 million given to them by the Weisfeld Group, owner of urban streetwear outfit FUBU; a source tells Radar that the duo's efforts were unsuccessful, and that Rains and Travers have now amicably parted ways. (Another reason for the closure: the market for clothes that only extraordinarily flamboyant homosexuals and busty transvestites can wear is probably not a big one.)

Norman Weisfeld, the owner of FUBU who brokered the Heatherette deal, could not be reached for comment. Neither could former in-house publicist Lysee Webb, but that's because she's already got a new job at Paper.

Update: Or maybe Heatherette's Not Done ... Yet.