A Labour peer has saved online fashion retailer Koovs from collapse after buying the business when it went into administration due to lack of funds.
Bosses at Koovs, dubbed the Asos of India, had hoped for a major investment from shareholder Future Lifestyle Fashions – part of India’s largest retail group – but the cash failed to arrive.
Lord Waheed Alli, who founded the firm, confirmed the acquisition of the business on Tuesday via SGIK 3 Investments to “safeguard the future of employees”.
In a statement, he said: “It is always tough building a business, particularly when it is in a new and developing market. I deeply regret this outcome for equity investors as a result of FLFL defaulting on its commitments.
“I strongly believe in the long-term future of this business and was one of its largest shareholders and creditors. I could not stand by and allow all the hard work which has been put in to be destroyed, with the loss of jobs and the damage to our suppliers which would have followed.
“The action we’ve now taken mean that Koovs and its trading subsidiary can continue to operate and that jobs, creditors and customers are protected.
“By leaving the rights to pursue legal action against FLFL, I hope that equity investors will be able to recover some of their losses, a process that I will also provide funding towards.”
Earlier on Tuesday, Koovs released a statement saying: “Koovs is disappointed to announce that, as a result of the failure by its largest shareholder… to fulfil a contractual commitment to invest a further £6.5 million into the company, and the failure by the company to secure alternative sources of funding, the board of Koovs has resolved to apply to place Koovs into administration.”
Shares, which trade on the London Stock Exchange’s junior AIM market, were suspended at 11.30am on Tuesday at 3.2p. They listed at 200p when joining the market in 2014.
The company added earlier that it expected the business to be rescued in a pre-pack administration, where a firm goes under and is rescued immediately, by Lord Alli.
Last week Clintons, the card retailer, was saved in similar circumstances, with its biggest creditor stepping up and taking over
Lord Alli, who oversaw Asos as its chairman for 12 years, had attempted to turn Koovs into Asia’s answer to the online fashion giant – cashing in on India’s growing younger affluent shoppers, keen to wear the latest trends.
Following a successful flotation in 2014, the company was valued at £36.2 million, but in 2018 it posted a £15.5 million loss for the year to March, with sales coming in at just £7.5 million.
The battle between the boardroom and Future Lifestyle Fashions was first flagged last month, and led to a furious backlash from amateur retail investors who had hoped for significant returns.
Future said at the time that the money had been held up by regulators, and the company pointed out £9.5 million had already been invested by the group.
Lord Alli has ploughed around £17 million of his own cash into Koovs since founding it in 2012, including a £7.4 million loan that makes him the firm’s biggest creditor.
The Labour peer, who left school at 16 for a £40-a-week job in publishing, built his £200 million fortune through Planet 24, a production company he set up with his then-partner Charlie Parsons and Bob Geldof.