Top Luxury Fashion Retailer Sparks Bankruptcy Rumors


With the crowd that the Las Vegas strip draws, it’s not uncommon to see people wearing luxurious fashion and accessories. Our flashy shows, casinos, restaurants, and clubs are a chance to see and be seen in clothes that might be out of place in other situations. For fashion lovers who appreciate a wide variety of goods and brands, Farfetch has been a top choice for several years. Farfetch’s website offers shoppers fashion across a variety of brands and styles. However, the cost of living is causing shoppers not just from the U.S. but worldwide to decrease discretionary spending. When consumers stop consuming, it can force a business to file for bankruptcy. Farfetch hasn’t declared bankruptcy yet, but it could be a possibility if the company doesn’t find new investors. If you’re a Nevada resident struggling with debt, bankruptcy could ease your burdens and create opportunities for financial growth. When you’re ready to start the process with your free consultation with a reputable Nevada bankruptcy firm, call 702-842-0700

Nevada bankruptcy lawyer consulting with a client, with a scale of justice and law books in the background, representing Zero Down Bankruptcy Lawyers of Nevada.

Did Farfetch End Up Here?

Farfetch has been in business since 2007, giving luxury fashion lovers a streamlined experience with countless choices and extravagance that simply can’t be found on other websites. It takes a cut from each of its sales of 30% or more. With items from brands like Gucci and Burberry, Farfetch’s takehome can be quite significant. But Farfetch has been facing challenges since the pandemic just like many types of businesses. Spending has decreased in major markets due to skyrocketing living expenses. The U.S. and China have reported rates of reduced spending on luxury sites like Farfetch. With rent, gas, and grocery costs through the roof, it becomes harder and harder to justify spending thousands of dollars on a purse or a single item of clothing. 

Farfetch reached its peak in 2021 when it had an estimated value of $23 billion. Despite economic struggles during the pandemic, online shoppers were still buying luxury at this time and helped Farfetch reach this status. This was after purchasing more than $2 billion from other fashion companies in 2019, posing for a near-total takeover of the fashion retail industry. It also took advantage of high-end department store Neiman Marcus’ bankruptcy filing to purchase a $200 million share. However, there are still bigger fish than Farfetch, with Alibaba investing $300 million in the company and an additional $250 million in its Chinese brand. Richemont made investments with the same structure as Alibaba. 

Farfetch didn’t just roll over at signs of decreased luxury spending. Earlier this year, the company released a collaboration with Reebok. However, this wasn’t enough to keep the company out of a reported $1.15 billion in debt. Additionally, many brands no longer can afford to pay Farfetch almost a third of their sales as an outside vendor and are taking back control of their online retail. One of the reasons that it is widely believed that Farfetch is about to file for bankruptcy is because they didn’t release their last quarterly statement, which would include information about the company’s debt. This causes investors to lose confidence and sell their stock. Its shares are now worth 97% less than its initial public offering. Farfetch negotiated a deal to purchase 47% of Yoox Net-a-Porter in 2022, but this deal may fall through if Farfetch declares bankruptcy. 

Which Type Of Bankruptcy Will Farfetch File?

Businesses have two main options if they seek to declare bankruptcy: Chapter 11 and Chapter 7. Many anticipate that if Farfetch files for bankruptcy, it will be a Chapter 11 case. If you read about a household name business declaring bankruptcy, chances are that the business declared Chapter 11 bankruptcy. Chapter 11 bankruptcy can be used to deal with complicated high balances and complicated structures. A business can emerge from Chapter 11 bankruptcy, which is not an option in Chapter 7 bankruptcy. A business that declares Chapter 7 bankruptcy must shut its doors permanently. When a business declares Chapter 11, it can either shut down or find a way to work with creditors and keep the business running. 

There are several strategies for rescheduling debt and emerging from Chapter 11 bankruptcy. Farfetch is seeking new investors to help it avoid bankruptcy, but it could also seek investors after filing for bankruptcy and while under court protection from creditors. Some companies use Chapter 11 bankruptcy to downsize, close locations, sell equipment, and more. All of this must be done with supervision and approval by the Chapter 11 bankruptcy creditor committee. A creditor committee can veto company decisions that can affect the case but will stay out of day-to-day operations. 

Small business debtors don’t need to be discouraged from Chapter 11 bankruptcy due to the creditor committee process. There are special rules that allow (relatively) small businesses to file for Chapter 11 bankruptcy without forming a creditor committee. A business can have up to $3,024,725 in debt (of which at least 50% had to have arisen from ordinary business activities) and qualify for a small business Chapter 11 case. A business can have up to $7.5 million in debt and qualify for a subchapter V Chapter 11 bankruptcy, which also eliminates the creditor committee process. 

Chapter 11 Or Chapter 7?

Most people don’t have the same needs as a luxury retailer that used to be worth billions of dollars- and now has debt that is probably in the billions of dollars. If you own your own business, filing for Chapter 11 bankruptcy, especially under a small business provision, may seem like an attractive form of debt relief. Your business may be your main source of income and the conditions causing you to seek out bankruptcy might be temporary. But many of our clients can complete a small business Chapter 7 bankruptcy, a procedure that is still much simpler than a small business Chapter 11 case. 

A small business owner may be able to protect many of their business assets through Nevada’s bankruptcy exemptions and open a new business that is almost identical to their original business. There are several ways to rework a business name that will be recognizable to old customers. For example, Mary’s Hair Salon could become Hair by Mary. John’s Pool Service could become John Pool Services Co. There are nearly infinite possibilities when it comes to small business chapter 7 cases. To learn more about what it takes to file in Nevada, call 702-842-0700

Learn More About Bankruptcy From An Experienced Professional

Bankruptcy can be a great tool to reduce debt and ward off creditors, but may not be the right fit for everybody. Additionally, you could qualify for either or both of Chapter 7 and Chapter 13, and filing the wrong type isn’t an easy mistake to fix. Nevada residents seeking relief from bankruptcy can enjoy assistance throughout the entire process, but the court doesn’t appoint attorneys for bankruptcy debtors. Your initial consultation, or your chance to interview our firm, is 100% free. Learn more about the bankruptcy process in Nevada and what your next steps should be. If you want to hire Zero Down Bankruptcy Lawyers of Nevada as your bankruptcy counsel, we can begin taking your creditor calls immediately. We also have payment plan options that allow our clients to pay after their case has been filed. To learn more, contact us or call 702-842-0700 to schedule your free phone consultation. 

Zero Down Bankruptcy Nevada

Zero Down Bankruptcy Lawyers
Phone: (702) 842-0700

Las Vegas Office
5552 Ashley Creek St
Las Vegas, NV 89135

North Las Vegas Office
7251 W Lake Mead Blvd
Las Vegas, NV 89128

1489 W Warm Springs Rd #110
Henderson, NV 89014