The former owner of online fashion brand In The Style is to bypass its shareholders and enter compulsory liquidation.
Itsarm plc, the business left behind after the sale of the Salford business in March, said there is a "significant risk "that creditors of the company would "suffer detriment" if the company was not placed into a formal insolvency procedure immediately.
The move comes after the company failed to secure the backing of its shareholders to de-list from the London Stock Exchange's AIM and enter liquidation last month.
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At the time, not enough shareholders had voted in favour of its plans for them to be approved by the required margins.
In a statement issued to the London Stock Exchange, Itsarm plc said a creditor's voluntary liquidation would not be "considered appropriate" given the "material risk that, if a special resolution was put forward for the company to be wound up and liquidators appointed as part of a proposed CVL, a similar outcome would arise to that in relation to the member's voluntary liquidation proposed at the adjourned general meeting of the company on 26 May 2023".
The firm is the cash shell that remained listed on AIM after the operating company was sold to a private equity firm for £1.2m in a bid to avoid administration. It first outlined its plans to de-list and enter liquidation in April.
In The Style's operating company, In The Style Fashion was bought by Baaj Capital LLP in March.
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The brand was founded by Adam Frisby who led it to float on AIM in March 2021 with a market capitalisation of £105m.
Itsarm plc said: "Itsarm plc announces that, further to the announcement on 26 May 2023, the company's directors have assessed the solvency of the company and concluded, in consultation with their advisers, that steps should be taken for the company to enter compulsory liquidation.
"The directors consider that, taking into account the company's contingent and prospective liabilities, there is a significant risk that creditors of the company would suffer detriment if the company was not placed into a formal insolvency procedure immediately.
"A creditor's voluntary liquidation is not considered appropriate for the company, given the material risk that, if a special resolution was put forward for the company to be wound up and liquidators appointed as part of a proposed CVL, a similar outcome would arise to that in relation to the member's voluntary liquidation proposed at the adjourned general meeting of the company on 26 May 2023.
"Such an outcome would mean that the company would be forced to continue to trade and incur the costs of an unsuccessful CVL proposal, which would likely be detrimental to the company's creditors.
"Accordingly, the directors have resolved to make a petition to the High Court that the company be wound up.
"A further update will be made in due course regarding the timing of the hearing for such petition and any subsequent order to wind up the company."
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