Down Debt

Missguided suppliers believe CEO ‘staged’ bankruptcy to avoid debt – Sourcing Journal

Clothing manufacturers and consumers are angry at the new Missguided, which they claim is the old Missguided with a light wash of fresh paint.

The fast fashion online retailer, now operating under the auspices of Sports Direct and House of Fraser owner Frasers Group, reopened its doors last week with a 70% MG warehouse sale, trumpeting that ” everything must disappear”.

“We are excited about our future as we reshape our brand, product offering and customer experience to come back stronger than ever,” Missguided wrote in a “customer statement” on its website. “We are acutely aware of the impact the administration of Missguided has had and would like to take this opportunity to thank you for your continued support.”

However, customers who placed orders before June 16 and requested refunds for returns or unfulfilled orders are virtually out of luck. As these orders were placed with Missguided Limited, aka the old Missguided, any monies due are now treated as an unsecured debt by the administrators.

“The admins have advised that they are not legally able to refund unfulfilled orders or accept any refunds for items you wish to return,” Missguided wrote in an attached FAQ. Anyone wishing to submit a claim will need to register as an unsecured creditor on an insolvency website, he said. Teneo Financial Advisory, the administrator of Missguided, did not respond to a request for comment, nor did anyone from Missguided or Frasers Group.

Angry customers have flooded Missguided’s Twitter and Instagram pages demanding the money owed to them. “Stronger than before?” You haven’t changed anything, you’re still selling the same clothes on your website as before, you’re just not shipping them to people who have paid. If you still have previous stock, orders should be fulfilled,” one wrote. “In the current climate, do you really think it’s okay to take people’s money and keep it!!? I will never shop with you again,” said another. “Missguided selling the stock which most people have paid and returned and haven’t been refunded!!!!!” said a third.

Confusion over where the old Missguided ends and the new Missguided begins has become more acute after Frasers Group reappointed Nitin Passi, who founded the Manchester-based company in 2009, as CEO. Passi sold a 50% stake in Missguided to Alteri Investors, who declined to comment for this story, in late 2021. It was around this time that Missguided imposed unilateral 30% discounts on orders, said providers. In April, Passi resigned as chief executive, just as the clothing supplier announced it was cutting dozens of jobs.

“I’m absolutely furious that Nitin has come back and thinks he can just start fresh and ignore the disaster he left in his wake,” said a former Missguided employee, who asked. anonymity for fear of backlash. Sourcing Journal.

Even more outraged are suppliers who are likely to owe tens of millions of pounds, although the exact amount is difficult to determine as the former Missguided’s supply base spanned countries such as China, Morocco , Pakistan and the United Kingdom. Many of those based in the English manufacturing hub of Leicester recognize the items being sold at the MG warehouse sale. They haven’t been paid for them and may never be.

“The website is working and they are selling the stock we delivered but they haven’t paid for that stock,” a Leicester-based supplier, who asked to remain anonymous, told the Sourcing Journal. The factory, which made clothes exclusively for Missguided, has closed and cannot pay its workers because there is simply no money. The search for new customers has so far proved unsuccessful.

“We are completely destroyed and haven’t heard from anyone,” said another supplier from Leicester, who also relied heavily on Missguided for orders. “This is disgusting behavior from these companies. Huge bills and we still can’t figure things out.

The factory owner is convinced that the whole series of affairs, including the Missguided bankruptcy, were “100% pre-planned” as a means of reneging on his debts. Missguided, the manufacturer said, “bought heavily” in the first four months of the year, even after cracks appeared in its business. It is difficult for the supplier to see this as anything other than harmful.

Dominque Muller, director of policy at Labor Behind the Label, a Bristol-based workers’ rights group, is fighting to recover money for suppliers and their employees. She has heard that Teneo will operate the Missguided storefront for the next eight weeks to sell shares of the former company. After that, the new Missguided will operate as a stand-alone business. The biggest question she has now is what happens to the proceeds of this MTG warehouse sale? She also wants to know what multi-brand retailers like Asos and Zalando, who sell Missguided products, are planning to do.

In a letter she delivered on Friday, Muller urged Passi and Michael Murray, CEO of Frasers Group, to settle their debts to Missguided suppliers, “thus respecting the legal rights of workers who make Missguided garments.”

“Missguided.co.uk is now back online selling shares that have not been paid for,” she wrote. “We have been in contact with a number of suppliers who have identified garments that have essentially been made by workers for free and the profits from these garments now go to Missguided. This is unacceptable. Currently, Alteri (and his company ERS) investors R. Passi and Nitin Passi will benefit from the sale of Missguided as office holders and Teneo, as administrators, will also earn a fair salary for the process. administration while suppliers and supply chain workers are left as unsecured investors. Again, this is not acceptable. »

Labor Behind the Label has previously lodged complaints with the UK Insolvency and Investigation and Enforcement Services for potential fraud and illicit trading. The organization also plans to track the individual liability of directors under the Insolvency Act 1986, the Companies Act 2006 and the Bribery Act 2010.

“Suppliers are just dumbfounded,” Muller told Sourcing Journal. “Did [Passi] engineer all this? Did he sell to Alteri knowing the company was losing business, knowing Alteri would shut it down to resell? It’s a guess, but suppliers say it was a deliberate decision, to get rid of all debts and start over. What if it wasn’t deliberate, because some suppliers were [previously] giving him the benefit of the doubt, most of them are now like, ‘You know, I don’t have any faith in him.’

Missguided, which was recently kicked out of the Ethical Trade Initiative for “unsatisfactory” ethical performance, will either have to find new suppliers or revert to old ones. Muller, however, said the manufacturers she spoke to said they would never do business with the company again.

Meanwhile, Labor Behind the Label hopes other fashion brands will write to the UK government asking for a review of UK laws to put in place safeguards so something like this doesn’t happen again. There also needs to be reform of insolvency laws so that “workers aren’t all the way down,” Muller said, adding that she’s spoken to workers who haven’t been paid for nearly two years. month. “The number of worker cases that we are going to see will increase as we go along.”

“Many brands in the UK have already called on the government to do more and introduce due diligence legislation,” Muller said. “And that’s an example I think of where brands are desperate for a level playing field, as they call it, and the government is way behind the brands. And whether that’s a political or an ideological position, or just because that the government is rubbish, I don’t know. You can quote me on that.