Farfetch, the luxury e-commerce platform, is facing another setback following its acquisition by South Korea’s Coupang. Recent reports reveal that the company has been hit with a winding-up petition from creditors in the Cayman Islands. These creditors, who are owed $400 million, argue that there were significant governance issues within Farfetch that led to the devaluation of the business.
It is worth noting that just a few months ago in August, Farfetch seemed to be in a healthy financial position, with forecasts suggesting it would have $800 million in cash by year-end. However, bondholders are now demanding the appointment of a liquidator and a thorough investigation into the actions of José Neves, the founder and CEO of Farfetch. The petition accuses Neves of striking a deal that allowed him to maintain control over the company, to the detriment of both the business and its stakeholders.
This recent development comes on the heels of Farfetch’s acquisition by Coupang, which resulted in shareholders losing their investments. Prior to the sale, the company’s stock price had plummeted by 99% from its peak in 2021, raising concerns about its viability. Farfetch had previously gone public on the New York Stock Exchange in 2018.
Neither Farfetch nor Coupang has offered any comments regarding the winding-up petition. This legal challenge further adds to the challenges faced by Farfetch and raises questions about the decision-making processes and management accountability within the company. The outcome of the petition and any subsequent investigations could have significant ramifications for the future of Farfetch and its stakeholders.