Farfetch founder 'destroyed his own value' to rush takeover, documents claim

Since listing in 2018, Farfetch has had a roaring performance on the New York Stock Exchange. Photo: BRENDAN MCDERMID

Farfetch has been hit by a winding up petition amid claims its founder destroyed the luxury fashion retailer's value ahead of a $500m (£396m) rescue deal agreed last month.

Creditors owing Farfetch $400m (£316m) that could be wiped out in a takeover said there were «serious deficiencies» in the company's management in a winding-up petition filed in the Cayman Islands.

The document says the takeover of South Korean retailer Coupang was rushed through and accuses Farfetch management of «taking unreasonable steps that would destroy value.»

Bondholders have now called for a liquidator to be appointed and demanded an investigation into the conduct of José Neves, Farfetch's founder and chief executive.

Mr Neves is accused of “making a deal” to sell the business “in exchange for his continued involvement in or control of the business he founded at the expense of the company and its stakeholders.” parties.» , the statement says.

Coupang's deal to buy Farfetch under pre-administration wiped out shareholders and many of the company's bondholders when it was completed in late January.

Before the deal, Farfetch's value had fallen 99% from its 2021 high. The rescue ends the British company's turbulent run on the New York Stock Exchange following its 2018 listing.

> Jose Neves founded luxury retail chain in 2007. Photo: Julian Simmonds

The London-headquartered company, founded by Mr Neves in 2007, helps high-net-worth shoppers shop from designer brands including Burberry and Gucci, as well as thousands of independent stores.

The website aimed to rapid expansion by acquiring fashionable clothes. label New Guards Group in 2019, but struggled to contain costs and lost $455.6 million after taxes in the first half of 2023.

In the Cayman Islands filing, the company's creditors argued that Farfetch was in «good financial condition» as recently as August last year, projecting it would have $800 million in cash by the end of the year, and citing reasons its implosion was «completely opaque.»

Creditors added that the company «does not have a functioning or independent board of directors» following the resignation of all its directors except Mr Neves, who held 77% of voting rights in the business.

They called for the appointment of restructuring experts Alvarez & Marsal will oversee a liquidation process to recoup his investment.

The Telegraph reported in November that Mr Neves was in talks to take the company out of the public markets, but that ultimately ended in a pre-administration deal.< /p>

On January 31, Farfetch said its advisers JP Morgan had undertaken a “robust marketing process” to try to save the business.

Following the takeover last month, Kupang said: “Farfetch is now well positioned for sustainable and thoughtful growth.”

A Farfetch spokesman declined to comment. Kupang did not respond to requests for comment.