LONDON, England – Luxury e-commerce marketplace, Farfetch, has had a tumultuous week, causing concerns for its new owner, South Korea-based Coupang. The trouble began when a group of holders of Farfetch convertible bonds, known as the 2027 Ad Hoc Group, filed a lawsuit in the Cayman Islands seeking to liquidate Farfetch Limited and recover $404 million in losses. Neiman Marcus Group (NMG) also announced the termination of its commercial partnership with Farfetch, although the company continues to hold a $200 million minority investment in NMG. Additionally, luxury brand conglomerate Kering has pulled all its brands from the Farfetch marketplace, including Gucci, Saint Laurent, Balenciaga, and Bottega Veneta. Farfetch and Coupang have yet to issue public statements regarding the lawsuit and the other setbacks.
The lawsuit, filed by Wilmington Trust on behalf of the 2027 Ad Hoc Group, demands the liquidation of Farfetch Limited and the repayment of outstanding notes. The suit also calls for an independent investigation into the company’s affairs, including its decline and the acquisition process. The petition alleges serious mismanagement by CEO José Neves, who effectively called the shots in a $500 million bridge loan from Coupang affiliates, leading to the rushed acquisition just before the end of the exclusionary period for other deals. All this has raised concerns among stakeholders and investors about the company’s governance and leadership. Despite these challenges, Farfetch remains committed to its partnership with brands and boutiques to provide an elevated luxury experience for customers.
The recent events surrounding Farfetch raise questions about the future of the company and the potential departure of other partners. The lawsuit highlights concerns about Farfetch’s rapid decline and the lack of transparency in its management. While no formal allegations of fraud have been made, other stakeholders have filed class-action suits alleging securities fraud against Farfetch and its top executives. Investors, such as Vijay Marolia at Regal Point Capital Management, have voiced their concerns about the company’s governance and the sudden departure of the entire board of directors before the Coupang deal. As the situation unfolds, it remains to be seen how Farfetch and Coupang will respond to these challenges and whether the luxury e-commerce marketplace can regain its footing.