Koovs has been rescued from complete collapse by its founder Lord Waheed Alli after its largest shareholder failed to “fulfil a contractual commitment to invest” millions.
The online fashion giant, which is widely regarded as the ‘Asos of India’, announced yesterday that it had no choice but to enter administration after Future Lifestyle Fashions (FLF) failed to provide £6.5 million in extra funding, despite a contractual obligation.
FLF, Koovs’ largest shareholder and part of India’s largest retail group, had reportedly been at odds with Koovs’ boardroom for some time as the fashion retailer continued to haemorrhage money, making a loss of £15.5 million last year on sales of just £7.5 million.
When the brand went public in 2014 its shares were listed at 200p representing a valuation of £36.2 million. Yesterday Koovs suspended its shares on the junior AIM market at just 3.2p.
Despite its financial woes its founder Alli, who acted as Asos’ chairman for 12 years and has already ploughed £17 million of his own cash into the brand since founding it in 2012, stepped in to rescue Koovs.
“It is always tough building a business, particularly when it is in a new and developing market,” Alli said.
“I deeply regret this outcome for equity investors as a result of FLF 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 FLF, I hope that equity investors will be able to recover some of their losses, a process that I will also provide funding towards.”