Creditors bid to wind up luxury fashion seller Farfetch
FARFETCH has been hit by a winding up petition amid claims its founder destroyed the value of the luxury fashion retailer in the lead up to a $500m (£396m) rescue deal last month.
Creditors owed $400m (£316m) by Farfetch, who stand to be wiped out by the takeover, claimed there had been “serious deficiencies” in the company’s governance in a winding up petition filed in the Cayman Islands.
The filing said the takeover deal by South Korean retailer Coupang had been rushed through and blamed Farfetch’s management for “entering into unjustified value-destructive steps”.
Bondholders have now called for the appointment of a liquidator and demanded an investigation into the conduct of José Neves, the founder and chief executive of Farfetch.
Mr Neves is accused of having “struck a bargain” to offload the business “in exchange for him remaining involved with or in control of the business which he founded, at the expense of the company and its stakeholders”, the filing said.
Coupang’s deal to buy Farfetch in a pre-pack administration wiped out shareholders and many of the company’s bondholders when it was completed in late January.
Farfetch’s valuation had plummeted 99pc from a high point in 2021. The bailout brought to an end the British company’s tumultuous run on the New York Stock Exchange after it listed in 2018.
The London-headquartered business, founded in 2007, helps shoppers buy from designer labels including Burberry and Gucci, as well as independent shops. The website had sought to expand but struggled to contain its costs and lost $455.6m after tax in the first half of 2023. In the Cayman Islands filing, the creditors claimed that as late as August last year Farfetch appeared in “good financial health”, with forecasts that it would have $800m in cash at the end of the year, and alleged the reasons for its implosion were “opaque”.
In a filing on Jan 31, Farfetch said its advisers JP Morgan had undertaken a “robust marketing process” to try to salvage the business. Farfetch declined to comment. Coupang did not respond to requests for comment.