In early 2024, Coupang, Inc. (“Coupang”) completed its acquisition of Farfetch Holdings plc (“Farfetch”) in a transaction that shook the luxury-e-commerce world.[1] The deal, announced in December 2023 and finalized in January 2024, provided Farfetch with approximately $500 million of bridge financing and effectively wiped out its existing equity holders.[2] This transaction illustrates how distressed M&A can shift power away from shareholders and toward acquirers and creditors, exposing legal and regulatory gaps in cross-border governance, fiduciary duties, and transparency.[3]
I. Farfetch’s Structure and Financial Distress
Farfetch was incorporated in the Cayman Islands[4] but publicly listed on the New York Stock Exchange under FTCH, meaning its governance was subject to Cayman corporate law while its disclosure obligations were governed under the U.S. securities law.[5] Farfetch operated a luxury e-commerce marketplace facilitating transactions across more than 190 countries and connecting over 1,400 boutiques and brands, positioning itself as the core digital infrastructure provider for the luxury fashion industry.[6]
Despite the platform’s scale, Farfetch’s capital structure became unstable between 2022 and 2023.[7] Farfetch had accumulated approximately $2.8 billion in financial obligations, including convertible notes and term loans maturing in 2025 and 2027, creating refinancing pressure as global interest rates rose.[8] Analysts noted that Farfetch’s financing strategy relied heavily on growth-driven acquisitions, including acquiring LUXCLUSIF, Palm Angels, Violet Grey, and Wannaby, without generating consistent positive cash flow.[9] In December 2023, Fitch Ratings downgraded Farfetch to CC, a rating signaling imminent default risk and a high probability of debt restructuring or forced asset sale.[10] This downgrade coincided with Farfetch abruptly cancelling its earnings announcement and withdrawing forward financial guidance, further signaling acute liquidity distress to the market.[11]
When Coupang announced it would inject $500 million in senior secured financing and acquire Farfetch’s business and assets in early 2024, the board faced a classic distressed M&A dilemma between preserving enterprise value through a rapid sale or facing insolvency and potential liquidation.[12] As a result of the transaction structure, all existing equity holders were wiped out because the transaction transferred the operating business while leaving equity behind in the holding entity.[13] The deal proceeded without a shareholder vote because the acquisition was executed through a UK pre-pack administration asset sale, where approval requirements fall on the insolvency administrator and creditors, not equity holders.[14]
The valuation collapse was severe, from a $23 billion market cap during its peak in 2021, pandemic era, to under $500 million by late 2023.[15] On January 26, 2024, a group of Farfetch’s 2027 convertible noteholders publicly mobilized to challenge the Coupang transaction, asserting a “rapid and unexplained deterioration” between August and December 2023 and warning of value destruction for existing investors.[16] The same noteholder group also stated that “at least three other credible parties were publicly reported to be interested in all or parts of the business,” and argued that the transaction agreement with Coupang and Greenoaks imposed economics (including what they called a $1 billion “poison pill”, referring to restrictive terms deterring competing bids), and did not fully consider alternative bids.[17]
II. Legal Framework: Fiduciary Duty and Distressed M&A
Under Cayman Islands law, directors owe their duties to the company and must act in good faith for proper purposes in what they honestly consider to be the company’s best interests.[18] When a company is insolvent or bordering on insolvency, Cayman authorities recognize that directors must take the interests of creditors into account because the economic risk has shifted from equity to the company’s creditors.[19] Cayman guidance further emphasizes that directors should ensure that they are properly informed about the company’s financial affairs at all times and obtain regular reporting to support informed decision-making.[20] In practice, this “creditor-interest” perspective supports board decisions that prioritize enterprise preservation, such as emergency rescue financings or expedited sales, so long as directors honestly believe the steps are value-preserving for the company as a whole.[21]
The structure of a distressed deal can significantly narrow or eliminate ordinary shareholder approval levers, particularly where the transaction is implemented as an asset acquisition with senior secured rescue financing rather than a conventional share sale.[22] Coupang publicly stated that it acquired the assets of Farfetch and provided access to $500 million of capital, describing a senior rescue package typical of distressed transactions.[23] Cayman corporate practice materials note that directors generally may approve asset sales on the company’s behalf, and there is no standalone, across-the-board statutory requirement for a shareholder vote on an asset sale outside of specific statutory merger or scheme procedures.[24] Because Farfetch was a foreign private issuer (FPI), NYSE corporate-governance rules that would otherwise require certain shareholder approvals are broadly relaxed to the extent permitted by the issuer’s home-country laws, which can reduce exchange-level voting triggers in emergency financings.[25] NYSE’s 2024 guidance also underscores that Section 312 shareholder-approval requirements are targeted to new issuances of equity or convertible securities, which are not directly implicated by a pure asset sale structure, further explaining why distressed asset deals often proceed without a shareholder vote.[26]
On the securities-law side, 17 C.F.R. § 240.13e-3 (2024) imposes disclosure obligations when an issuer or its affiliate effects a “going-private” transaction, including the duty to file Schedule 13E-3 and to state whether the transaction is fair or unfair to unaffiliated security holders.[27] The SEC’s Compliance & Disclosure Interpretations reiterate that each filing person in a Rule 13e-3 transaction must evaluate and disclose fairness from the standpoint of unaffiliated holders and provide the required information at least 20 days before the relevant action.[28]
In Farfetch’s case, the rapid asset sale and delisting context prompted bondholder objections, alleging that the process and terms disadvantaged existing investors and deterred competing bids.[29] This illustrates how emergency structures can collide with investor-protection expectations, even when transaction mechanics fall outside classic Rule 13e-3 pathways. Coupang’s completion announcement underscores that the transaction closed on an asset-purchase basis with immediate liquidity support, which reflects a rescue-financing profile rather than a traditional issuer-led going-private merger.
III. Conclusion
The Coupang-Farfetch transaction provides a case study on how distressed cross-border acquisitions operate from a legal perspective. It demonstrates that when a target is near insolvency, typical shareholder-centric governance assumptions no longer fully apply. Instead, creditor protection, acquirer senior financing, and rapid execution become the dominant factors. The key lesson is that structure matters: how a deal is framed (asset purchase vs. share purchase or rescue financing vs. normal takeover) can dramatically alter who has rights, who controls the outcome, and how much transparency is owed. Perhaps securities regulators should consider expanded disclosure for cross-border rescue transactions. As global M&A continues to accelerate and distressed targets increasingly become the focus, it may be time to ask whether our current governance frameworks sufficiently protect shareholders and ensure fair process in high-stakes deals.
[1] See Malique Morris, South Korea’s Coupang Completes Farfetch Acquisition, Bus. of Fashion, (Jan. 31, 2024), https://www.businessoffashion.com/news/luxury/coupang-completes-farfetch-acquisition/.
[2] See SEC, Farfetch Ltd., Form 6-K (Dec. 18, 2023), https://www.sec.gov/Archives/edgar/data/1740915/000119312523297359/d667724d6k.htm.
[3] See Distressed Mergers and Acquisitions, Wachtell, Lipton, Rosen & Katz, (Apr. 17, 2013), https://www.wlrk.com/webdocs/wlrknew/AttorneyPubs/WLRK.22377.13.pdf.
[4] See SEC, Fifth Amendment to Credit Agreement, Accession and Fee Agreement, 36, (2023), https://www.sec.gov/Archives/edgar/data/1834584/000183458424000023/cpng-12312023exhibit1022.htm.
[5] See SEC, Farfetch Limited Class A Ordinary Shares (2018), https://www.sec.gov/Archives/edgar/data/1740915/000119312518281206/d607688d424b4.htm#:~:text=We%20are%20both%20an%20%E2%80%9Cemerging,contrary%20is%20a%20criminal%20offense.&text=We%20refer%20you%20to%20%E2%80%9CUnderwriting,purchasers%20on%20September%2025%2C%202018.
[6] See Farfetch Opens a World of Luxury to Millions of New and Engaged Customers, Farfetch, (Sep. 6, 2025), https://aboutfarfetch.com/media/news/farfetch-opens-a-world-of-luxury-to-millions-of-new-and-engaged-customers/; see also SEC, Farfetch Ltd., Annual Report (Form 20-F) (Apr. 28, 2023), https://www.sec.gov/Archives/edgar/data/1740915/000095017023006698/ftch-20221231.htm.
[7] See Malique Morris, Imran Amed, Farfetch Seeks ‘White Knight’ to Avert Collapse, Sources Say, Bus. of Fashion, (Dec. 04, 2023), https://www.businessoffashion.com/articles/luxury/farfetch-seeking-rescue-to-awerevoid-collapse/.
[8] See id.; See also SEC, Farfetch Limited and Wilmington Trust, National Association as Trustee, (Apr. 30, 2020), https://www.sec.gov/Archives/edgar/data/1740915/000119312520128747/d921299dex41.htm (3.75% Convertible Senior Notes due 2027).
[9] See The Farfetch Enigma: From Digital Dominance to Distressed Debt Dilemma, JunkBond Investor, (Oct. 10, 2023), https://www.junkbondinvestor.com/p/the-farfetch-enigma-from-digital.
[10] See Fitch Downgrades Farfetch to ‘CC’; Removes Rating Watch Negative, Fitch Ratings, (Dec. 22, 2023, 7:13 AM), https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-farfetch-to-cc-removes-rating-watch-negative-22-12-2023.
[11] See supra note 6.
[12] See Coupang, Coupang Completes Acquisition of Farfetch, Press Release (Jan. 31 2024), https://ir.aboutcoupang.com/news-events/news/news-details/2024/Coupang-Completes-Acquisition-of-Farfetch/default.aspx.
[13] See supra note 1.
[14] See supra note 2. See also Pre-Pack Rules Repackaged, White & Case, (May 06 2021), https://www.whitecase.com/insight-alert/pre-pack-rules-repackaged.
[15] See Elizabeth Paton, Farfetch Gets $500 Million Lifeline From Coupang, N.Y. Times, (Dec. 18, 2023), https://www.nytimes.com/2023/12/18/business/farfetch-coupang-fashion-deal.html.
[16] See Madeleine Schulz, Farfetch Investors Challenge ‘Poison Pill’ Coupang Sale, (Jan. 26, 2024), https://www.voguebusiness.com/story/companies/farfetch-investors-challenge-poison-pill-coupang-sale; see also Lauren Thomas, Farfetch Bondholders Protest Coupang Takeover, FIN. TIMES (Jan. 26, 2024).
[17] Id.
[18] See Duties of a Director Under the Law of the Cayman Islands, Stuarts Humphries, https://www.stuartslaw.com/cms/document/duties-of-a-director-under-the-law-of-the-cayman-islands.pdf.
[19] See Jonathon Milne, Anna Lin, Directors’ Duties: The Next Chapter, Conyers, (Aug. 2023) https://www.conyers.com/publications/view/directors-duties-the-next-chapter/; see also BTU Power Co. v. Cayman Int’l Holdings Ltd., [2021] (Grand Ct.).
[20] See id. See also Statement of Guidance: Corporate Governance (Mutual & Private Funds), Cayman Is. Monetary Auth., https://www.cima.ky/upimages/regulatorymeasures/SOG-Corp.Gov.forMFsandPFs_1682541877.pdf.
[21] See supra note 16.
[22] See Pre-Pack Rules Repackaged, White & Case, (May 06 2021), https://www.whitecase.com/insight-alert/pre-pack-rules-repackaged.
[23] See Coupang Completes Acquisition of Farfetch, Coupang, (Jan. 31, 2024), https://ir.aboutcoupang.com/news-events/news/news-details/2024/Coupang-Completes-Acquisition-of-Farfetch/; see also supra note 14.
[24] See Dean Bennett, Jacob MacAdam, Legal 500 Country Comparative Guides 2025: Cayman Islands (Mergers & Acquisitions), Appleby, https://www.legal500.com/guides/chapter/cayman-islands-mergers-acquisitions/?export-pdf.
[25] See NYSE Regulation, Listed Company Compliance Guidance for NYSE Issuers, 6, (Jan. 31, 2024), https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_2024_Annual_Guidance_Letter.pdf; see also NYSE Listed Company Manual § 312.03 (2024).
[26] See id. at 2.
[27] See 17 C.F.R. § 240.13e-3.
[28] See Compliance and Disclosure Interpretations, Going Private Transactions, Exchange Act Rule 13e-3 and Schedule 13E-3, SEC, (Jan. 26, 2009), https://www.sec.gov/rules-regulations/staff-guidance/compliance-disclosure-interpretations/going-private-transactions-exchange-act-rule-13e-3-schedule-13e-3.
[29] See supra note 11.
