By Oct. 26, Hicks and Limeberry hadn’t been paid in over a week. That day, she received an email from Mike McEwan, Jane’s co-founder.
“Hi Dana, I’m sorry you’re experiencing a slower payment schedule,” Mike wrote. “I assure you we’re doing our best to get to everyone paid.”
He was on Jane’s board, but like Megan, he had no active role in the company’s day-to-day operations. They each continued to receive $350,000 in annual fees from the company until the end of 2022, according to DSI’s documents.
Mike wrote to Hicks that he didn’t have any control over payments but was “brought in to help from a product perspective.” That was why Flash Deals were back, Mike said, along with a coming feature called Moments, which would help with “driving more engagement with your products.”
“Although this isn’t a solution to your immediate problem, over the long term, if sellers participate and take advantage of the opportunity, I believe it will,” Mike wrote.
Four days later, after Hicks emailed the company again, Jane sent her two payments totaling about $40,000, a fraction of what she was owed.
By then, sellers like Allen were communicating and realizing how widespread the problem was. In mid-November, he said, many large sellers started pulling their products off of Jane out of frustration that the company wasn’t paying them what they were owed. Hicks did the same, telling the company to either pay her all the money Limeberry was owed or suspend her product listings.
On Nov. 17, the site was replaced with a “Down for maintenance” error message, and reports began to trickle out that the company had gone under. Instead of communicating with sellers and other creditors directly, Jane signed its assets over to DSI Assignments, which will oversee the asset liquidation process on Jane’s behalf in the Court of Chancery in Delaware. Jane’s offices were in Utah, but it was registered as a company in Delaware.
On Wednesday, DSI Assignments released a statement announcing the auction of Jane’s assets that will take place through Jan. 15.
According to forms DSI Assignments filed on Jane’s behalf, the company still owes about $152,000 to Limeberry and almost $65,000 to Johnny Threads.
Sellers trusted Jane.com as a reliable marketplace to list their products and process transactions, with Jane’s cut of the sales going toward additional benefits like advertising. But as it turns out, Jane’s business was more precarious than sellers say they were led to believe, and sellers took the financial risk of having Jane receive and decide what to do with the money from their sales. Now that Jane has failed, sellers have the least financial security out of anyone whose money was invested in it.
Retail expert Neil Saunders of GlobalData said people who sell their goods on third-party platforms might believe the platforms are intermediaries that hold their money until they claim it, but he said it’s not always that simple. In some cases, Saunders said, the platforms will use that revenue as general cash flow to pay overhead and other expenses. Sometimes, those things are prioritized over paying vendors. If a business is healthy and has budgeted and projected its expenses properly, that works out. But if it isn’t and it hasn’t, sellers are left short.
“In most of these cases, whilst there can be a bit of financial negligence, it’s usually not deeply criminal. It’s just companies not projecting cash flow properly or taking on too much debt and not being able to repay,” he said. He added that it’s unclear what the case might be for Jane.com.
Source: | This article originally belongs to Nbcnews.com
