Letsbuyit faces bankruptcy

Letsbuyit.com, the cooperative buying website, will be wound up on Friday at a bankruptcy hearing in Amsterdam unless its management team can convince a judge to give it a stay of execution.

The firm's administrators yesterday applied to the court to convert the order granting the Dutch branch of Letsbuyit.com protection from creditors until 14 March to bankruptcy proceedings affecting all the company's 14 European operations.

A statement from administrators confirmed that Letsbuyit's management would contest the application. It said: "The present management still sees chances for survival and has indicated it will put forward a defence."

Press reports from the Netherlands have also indicated that one of the company's leading creditors may also seek to oppose the wind-up order. The unnamed party is quoted as saying it believes that giving the company the chance to continue trading may prove a better bet in the long-term.

Staff at Letsbuyit's UK office stopped taking customer phone enquiries on Wednesday afternoon and are not expected to resume customer service duties unless the company receives a stay of execution at Friday's bankruptcy hearing.

Until yesterday, customer support staff had told customers awaiting delivery of goods that they would either eventually receive what they had ordered or a full refund.

Rivals, French-owned Dealpartners and the Norwegian CoShopper, have talked to administrators about acquiring parts of the company's operations, such as its subscriber list, but are not thought to be interested in an outright acquisition.

Letsbuyit management, lead by acting chief executive and company founder John Palmer, are believed to be looking to raise 40m euros to take the company through to profitability in the last quarter of 2002. The firm's previous management, which resigned on 3 January, had been trying to raise 80m euros.

Investors have put in 182m euros so far. European rivals have said the firm simply spent too much establishing a pan-European brand too quickly. Bankruptcy would result in 320 job losses across Europe in what would be the continent's biggest dotcom collapse.

However, there have been none of the stories of extravagant spending on freebies that came with the collapse of fashion etailer Boo.com last year, which burnt 135m euros of investors' money in little over a year.