Farfetch, the luxury e-tail giant, is facing more challenges following its recent takeover by South Korea’s Coupang. According to DRNewspaper, the company has been hit with a winding-up petition filed by creditors in the Cayman Islands. These creditors claim that Farfetch’s governance had “serious deficiencies” and that the company owes them $400 million. They believe that the takeover was rushed and that the management is to blame for the missteps that led to the decline in the company’s value.
Just a few months ago, in August, Farfetch seemed to be in a strong financial position, with predictions of having $800 million in cash by the end of the year. However, the bondholders who filed the petition are now calling for the appointment of a liquidator and an investigation into the actions of José Neves, the founder and CEO of Farfetch. They argue that Neves made a deal that allowed him to maintain control of the company at the expense of its stakeholders.
The completion of the takeover earlier this month resulted in shareholders being completely wiped out. At the time of the sale, Farfetch’s share price had plummeted by 99% from its highest point in 2021, and concerns were already raised towards the end of the previous year about the company’s survival. Farfetch had previously been listed on the New York Stock Exchange in 2018.
Both Farfetch and Coupang have chosen not to comment on the matter.
Links for reference:
1. DRNews – Farfetch Faces Winding-Up Petition
2. Business of Fashion – Farfetch Hit with Winding-Up Petition
