Farfetch bosses in High Court dispute over ‘serious mismanagement’
Several former Farfetch directors are in the midst of a High Court dispute with the retailer’s liquidators over claims of “serious mismanagement”.
Several former Farfetch executives are in the midst of a High Court dispute with the retailer’s liquidators over claims of “serious mismanagement”.
Three senior employees of the luxury platform, which went into liquidation last year, are being investigated into the circumstances that lead to its failure, The Times reported.
Liquidators at Alvarez & Marsal have raised concerns that Farfetch may have been “seriously mismanaged” by those in its leadership team in the run-up to its collapse.
These include founder of Farfetch José Neves, former group president Stephanie Phair and ex-CFO Elliot Jordan.
The liquidators are concerned about why there was “such a rapid and drastic deterioration in the company’s finances”, according to court documents.
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Alvarez & Marsal has accused the three former directors of failing to respond to requests for documents and information on a voluntary basis.
It argued that obtaining key documents and information without delay was “critical” to its investigations.
Alvarez & Marsal also wants to investigate the events leading to Farfetch’s £396m quick-fire pre-pack administration sale to South Korean retailer Coupang last year which wiped out shareholders and many of the company’s bondholders when it was completed.
The sale included a £394.7m bridge loan to help Farfetch avoid bankruptcy while the deal was finalised.
Farfetch creditors, owed more than £300m, claimed Neves had destroyed the value of the listed retailer and that there had been “serious deficiencies” in its governance as they issued a winding-up petition.
In recent court documents, the liquidator said the commerce business had “effectively written off over $1bn of debt obligations owed to it by way of the intercompany loans and has effectively been deprived of its ownership and interests in the Farfetch business as a whole and which took place without any public explanation in circumstances where, as recently as August 2023, the company and its directors had stated publicly that its business was in good financial health”.
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