A report from FTS has revealed what led Manchester fashion group In The Style to go into administration.
The company, which originally operated on an influencer-based business model, was delivering 85% of its sales through influencer collections – ie where an personality helps to design and market the fashion in exchange for a financial return.
This helped grow In The Style at speed and led to its listing on the AIM market, which valued it at more than £100m on listing in 2021. However, at the end of March 2023, it reported a loss of £8.4m and was delisted. It avoided a formal insolvency by being sold to Baaj Capital for £1.2m.
READ MORE – In The Style to avoid administration in £1.2m sale
This led to a strategic review of the business, a new business model, cost savings and diversified marketing mix to “a more rounded proposal”.
According to the report, in recent months it “continued to struggle with cash flow” as a result of legacy contracts, which are reported to have cost the company around £1m since the takeover.
It said that as a result of the cash flow problems, it failed to meet contractual obligations, “which in turn has led to negative publicity and damage to the Company’s goodwill. The position was deemed to be worsening.” At this point it went to FTS Recovery.
“The board were (at the time) of the opinion that the business was insolvent.”
The negative publicity included influencers claiming that they weren’t being paid and that staff and suppliers were “being teated unfairly.”
Founder and former CEO, Adam Frisby also turned to social media to offer to “help staff who’ve been dismissed without pay” adding that a podcast he’d planned to “share his truth” had been “silenced.”
READ MORE – Former In The Style boss speaks out over “redundancies”
After an FTS review, they concluded “it was clear there was insufficient cash to enable continued trading.”
The report said they explored various options to remedy the situation, before deciding on a pre-packaged administration deal – “to protect the business’ goodwill, and potentially avoid the need for redundancies.”
The company was sold to Alps Sourcing Ltd in Altrincham on 11th March for £220k.
That was made up of:
- Goodwill/Business Intellectual Property Rights for £75k
- Stock – £144,998
- Plant and Machinery / Seller’s Records – £1
- Business Contacts – £1
The sale was made up of £75k cash on completion and £75k deferred over 7 months and £75k by way of credit bid.
Alps Sourcing offered to transfer 87 staff under TUPE (Transfer of Undertaking Protection of Employment), however, this meant the remaining 18 staff would be made redundant.
The sole director/owner is Ajay Sidana who owns 100 ordinary shares in the company.
In March, Alps Sourcing changed its registered office to Charles House in Heywood, the HQ of In The Style. On the same day it published its accounts to 30th June 2024.
That showed it had a single employee, with shareholders funds of -£20,913. As yet there’s been no official comment from the new owner.
READ MORE – In The Style rescued from administration by Alps Sourcing
According to the administrators, In The Style had outstanding book debts of £351,408,74.
The Joint Administrators added that they anticipated 24 redundancies claims would be made through the liquidation. Plus there would be secondary claims by HMRC for VAT, PAYE and employee NIC deductions.
They added that they were “currently aware” of 198 unsecured creditor claims, to the sum of £4,551,656.58.
FTS published an estimated financial position of In The Style as at 10th March, showing a total deficiency of £21m between creditors and assets.
The creditor list is made up of 201 entries, totally £11m, including:
- ITS Investments – £3.6m
- Baaj Finance Ltd – £1.7m
- HMRC – £1.5m
- CBRE – £406k
- InnTitle Ltd (Skyland – £356k
- Best Fashion International Ltd – £230k
- Royal Mail – £220k
- Yizhouguoda Garment – £175k
- GVA Grimley – £170k
