£2m UNPAID DEBTS ON FAST FASHION HOUSE THAT FLOPPED

RARE London has gone bust leaving almost £2m in unpaid debts after the fashion retailer’s risky strategy of giving free clothes to celebrities failed to pay off.

The company, which went into administration in July, owes £1.6m to socalled non-preferential creditors – which includes trade creditors, customers and HMRC payments.

Former employees – who are preferential creditors – are thought to be owed £60,000. Administrators Duff & Phelps said they do not expect to pay back either group.

Rare, which sold party wear to fashion-conscious young women, was set up in 2013 by Adam Ryan and Neela Talwar.

Like its rivals Boohoo and Quiz, the firm made a name for itself by partnering with celebrities and getting them to post pictures of themselves wearing Rare’s clothing to their thousands of followers on social media. In its first two years of trading Rare turned over more than £1m. But the company got into financial problems after a series of business blunders. It offered free delivery and free returns to customers, but couldn’t afford the service after 50pc of all its items sold were sent back.

Seeking to revive its fortunes it signed a deal to produce a £250,000 exclusive line with American retailer Nasty Gal.

But Nasty Gal filed for Chapter 11 bankruptcy shortly after and Rare incurred a £400,000 bad debt as a result.

In August reality TV star Sam Faiers of The Only Way Is Essex fame took legal action against Rare, claiming she had not be paid for promotional work.

Duff & Phelps sold the stock to Asos, who paid £105,000 to buy and re-sell it under the Rare London name.