Missguided collapse could leave thousands of customers out of pocket | fashion industry

Thousands of Missguided customers could be left out of pocket as administrators are not expected to pay refunds that were applied for before they were called in on Monday and deliveries of orders are not guaranteed.

The online fashion retailer’s website gradually closed down on Wednesday, including access to customer services, after a £20m deal to acquire the brand was agreed with the Sports Direct owner, Frasers Group.

The Guardian understands that administrators from the advisory firm Teneo, who are to operate Missguided for the next weeks under the deal with Frasers, are not in a position to pay refunds requested before they were appointed on Monday. Deliveries of goods already ordered are also not guaranteed amid negotiations with GXO, the operator of Missguided’s warehouse in Trafford Park, Manchester.

Many shoppers complained on social media that they could not get information about their orders.

One customer who said they were waiting for refunds on three items questioned why the website had continued to operate on Monday and Tuesday. “Why are they still selling stuff when they are not even honoring refunds and current orders.”

Another said they had been told there was an “IT issue” at Missguided’s warehouse so refunds could not be processed.

A further customer added on Wednesday: “I was assured my two parcels would be delivered yesterday, still nothing.”

Frasers bought the brand and other assets for £20m. The initial deal is not thought to include Missguided’s stock and warehouse operations but will save the jobs of almost 150 head office staff.

Frasers is expected to integrate the brand into its own warehouse operations, which are run from Shirebrook in Derbyshire.

One worker at the Missguided warehouse said workers had already begun consultancy on potential redundancies.

“We are facing changes actually every day now, and we are not sure what will happen on the next day,” he said.

A number of former head office employees are considering legal action against the company over claims that the redundancy process was not properly managed. The legal firm Aticus Law said more than 65 former workers had got in touch for support and advice.

Almost 90 head office staff were told they were being made redundant via a conference call with just 25 minutes’ notice on Monday, with many workers finding out they had lost their jobs via social media.

Suppliers to the collapsed fast fashion brand have filed an official complaint to the Insolvency Service and are considering legal action over what campaigners say was “a reckless approach” by the company’s private equity owners.

Campaigners said they believed suppliers could be owed at least £15m. One Manchester-based supplier said they were owed more than £700,000 in delivered orders and work in progress. “We were assured there was money in the bank to pay suppliers,” he said.

Simon Fagan, the head of the litigation department at Aticus Law, said: “It has become apparent from both instructors and evidence received that, despite what appears to be a well-known financial problem with Missguided, various parties from Missguided continued to place orders , make misleading or untrue comments as to impending payments, and maintain that there was no reason to worry.

“Such representations could be actionable.”

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Missguided collapsed into administration after failing to secure a rescue deal despite interest from bigger rivals Boohoo and Asos. The company made headlines with its £1 bikini three years ago, selling it at a loss as a marketing stunt, and secured a high profile despite its relatively small size by sponsoring the reality show Love Island.

The fast fashion company, founded in 2009 by Nitin Passi, got into financial difficulties last autumn. It was saved from collapse in December last year when the private equity firm Alteri stepped in, buying a controlling stake and taking seats on the board. Passi left the company in April.

GXO did not respond to a request for comment. Teneo declined to comment.

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