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Sydney-based Designerex, the world's largest peer-to-peer designer dress sharing platform, has been placed into administration following the fallout of a legal dispute with a technology provider.
The award-winning company, which was founded by Kirsten Kore and Costa Koulis in 2016, has appointed Liam Bailey, from O’Brien Palmer, as administrator.
In a statement to customers, the company describes the appointment as a “difficult but necessary” decision which was triggered by the legal dispute with the unnamed technology provider.
However, Designerex has been locked in a legal battle with Adelaide-based app developer PixelForce – an issue that the company has blamed for delayed payments to clients.
PixelForce founder Hinney Lo has denied his company is to blame for the company’s payment issues, pointing out that he had enough faith in the business to make a $200,000 cash investment in Designerex two years ago.
“We operate with honesty and integrity with all clients,” Lo tells Business News Australia.
“It is very unreasonable that they blame PixelForce, or their tech partner, for causing any of their financial disruptions because it is in our best interests that Designerex succeeds like all our other clients. That’s why we invested in the first place.
“I don’t see how not paying their customers has anything to do with the dispute.”
The dispute with Designerex was triggered after PixelForce informed the founders that the app developer had been approached by a third party looking to establish a similar platform.
“We informed Designerex out of courtesy and respect that an alternative party had made a single inquiry to build a similar platform to Designerex, but this never ended up materialising,” says Lo.
“We have never built a competitor to Designerex. But we have invested $200,000 in Designerex on the same terms as other investors, and we have not received any payments from them for two years for any services rendered. We actually invested $200,000 cash and it wasn’t a sweat-for-equity deal.”
In its statement to customers, Designerex says the appointment of an administrator was necessary to ensure the survival of the business.
“This step allows us to reassess our position, minimise further disruption caused by this provider issue, and explore the best way forward for you - our customers, as well as our investors and stakeholders,” says Designerex.
The Designerex platform allows women to list and rent their designer dresses to other women, providing them with a side hustle for “underutilised” fashion that is sitting in their wardrobes.
Kore founded the business after renting one of her dresses to a complete stranger via Facebook.
Administrator Liam Bailey has told Business News Australia that, at this stage, it is too early to comment on the reasons for the insolvency.
“We intend to commence a campaign to market the business, whether for sale to a third party or for a restructure of the company as part of the administration process,” he says.
“We have already received expressions of interest in acquiring the platform and customer database.”
In the meantime, it appears that clients have been left in limbo following Bailey’s appointment with Designerex also announcing that dress bookings have been paused for now.
“The company is working towards any remaining dress supplier payouts and customer refunds to be paid in full,” says Designerex in its statement to customers.
“As pioneers in peer-to-peer fashion renting, the Designerex team have dedicated over nine years, spearheading, innovating and unrelentingly carving out a new fashion consumption business model since 2016.
“You are the very people - the early adopters, driving change for a more sustainable future, and we are so grateful to have been a part of this journey with you.
“While we undergo this transition, we are working to ensure minimal disruption and to explore opportunities for a stronger future. As part of this process, bookings have been paused.”
Designerex, a finalist in the National Retail Awards and winner of Best E-Commerce Startup at the 2019 Startcon Australasian Startup Awards, has more than 44,000 dress listings with operations also in the US.
The platform is said to be “the most secure designer dress rental platform in the world” and aggregates listings of both individuals and rental businesses.
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