SAN FRANCISCO (05/21/2000) - Boo.com may not be dead just yet. Court-appointed liquidators in London said Friday that they've received 63 inquiries from parties interested in buying all or part of the failed sportswear retailer.
Mick McLoughlin, a partner at KPMG Corporate Recovery in London, the firm appointed to oversee the liquidation procedure for Boo.com, says he is "very hopeful" that the outfit will be sold, perhaps as early as next week. Boo.com, a six-month-old retailer that had operated in 18 countries, shut down Wednesday night for lack of funds.
Boo's board turned control of the company over to KPMG liquidators after backers - including J.P. Morgan, Goldman Sachs and luxury-goods mogul Bernard Arnault - refused to bail out the cash-strapped firm. Boo.com owes creditors $25 million, McLoughlin said. To repay creditors, the company has retained KPMG to find the best deal. The most hopeful scenario would be to sell the entire operation to the highest bidder.
But McLoughlin says KPMG may have to split the company in two. In this scenario, the shopping site and the back-end order-fulfillment operation would be sold separately. Boo's back-end operation - specifically, its ability to ship product in less than a week to 18 countries in Europe and the U.S. - has attracted a great deal of interest from other e-commerce operations. In fact, during Boo's final days, the company's management had discussed outsourcing its order-fulfillment capability and shelving the storefront to boost revenues and cut costs.
"The fulfillment platform is where quite a lot of the investment [funds] have gone," McLoughlin says. However, he adds, "the easiest thing would be if we could sell the whole thing." To speed up the process, KPMG is asking all interested parties to submit, by the end of London's business day today, a refundable deposit of 1 million pounds. "This should ensure that our time and the staff's time is concentrated on serious buyers," McLoughlin says. If the firm finds a buyer, liquidators will begin the arduous process of repaying creditors. The number of creditors has yet to be finalized. McLoughlin says advertising expenditures probably account for the brunt of the bills.
Businesspeople around the world are paying close attention to Boo's demise. The company raised an estimated $125 million last year but burned through its funding at a rapid pace. It spent heavily on an elaborate multilingual, multinational site that opened in November. The site launched several months late, though, and technical problems dogged it from the get-go. Cost overruns forced Boo's management, led by CEO Ernst Malmsten and former model Kajsa Leander, to cut back on several ambitious ventures, including a lifestyle magazine that would have reflected Boo's bold fashion tastes. The management's numerous missteps left investors wary. Having lost confidence in Malmsten, they refused to furnish the company with the funds it needed to continue.