Balenciaga has dropped its $25million lawsuit against a Brooklyn production company that it claimed was responsible for part of the child imagery scandal it is now drowning in after being widely panned by celebrities. 

The fashion house announced on Friday that it was no longer seeking action against North Six, the production company that it said was responsible for child porn legal documents ending up in its July photoshoot. 

The decision came after widespread backlash from the fashion industry and celebrities including Yolanda Hadid and Martha Hunt, who said it was trying to shift the blame onto a third party production company to avoid embarrassment. 

'Balenciaga has decided not to pursue litigation,' the brand said on Friday in an Instagram post where it said it would create an image oversight board.  

The fashion house has however stopped short of firing Demna, the creative director responsible for a different, controversial photoshoot involving children. 

He issued a statement on Friday promising to 'do better' and  vowing to work with children's protection organizations.  

'I need to learn from this, listen and engage with child protection organizations to know how I can contribute and help on this terrible subject.

'I apologize to anyone offended by the visuals and Balenciaga has guaranteed that adequate measures will be taken not only to avoid similar mistakes in the future but also to take accountability in protecting child welfare in every way we can,' he said.