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The sneakersphere is up in arms with news that popular sneaker pre-ordering service, Zadeh Kicks, is filing for receivership (and pulling the rug).
For those unfamiliar with Zadeh’s service, the organization afforded sneakerheads the ability to skip the L on Nike SNKRS by pre-ordering hype sneakers before their public release dates. Unlike many other competing services on the market, Zadeh’s pre-orders were fairly priced and easy to place via his (now defunct) website. However, while ordering through Zadeh was cost effective and rather simple, his service did tend to have extremely long shipping times. In fact, delivery times have been reported to span as long as a year after the retail release of a given sneaker.
The lengthy shipping times coupled with pre-order prices that seemed too good to be true, led many to question the legitimacy of Zadeh’s business practices with many claiming that the organization was nothing more than a glorified ponzi scheme. Despite the naysayers and warning signs, sneakerheads continued placing orders with Zadeh - the most recent of which, being the Jordan 1 Chicago Reimagined set to release in October.
Fast forward to today, Zadeh announced via email that the company has filed for receivership and has closed its doors, leaving some sneakerheads out of tens of thousands of dollars.
What happened to Zadeh Kicks
We sat down with @SneakerLegal to go over exactly what happened. The following represents SneakerLegal’s legal explanation of and perspective on the ongoing situation.
It looks like he [Michael Malekzadeh, owner of Zadeh Kicks LLC] has hired a business law firm in Oregon to Petition the court to voluntarily dissolve Zadeh Kicks LLC. This essentially means that Malekzadeh is asking Oregon courts for assistance in legally shutting down his business and appointing someone to liquidate any remaining assets to pay what is owed.
It’s important to note that a petition for dissolution is NOT the same as filing for bankruptcy. Although the process may be the same, the two are different. An LLC can be dissolved for many reasons. Voluntary dissolution generally happens when the purpose of the LLC is completed or fails to be economically viable. Based on Zadeh's Petition, Zadeh Kiicks stated that its present liabilities exceed its present assets, aka Zadeh Kicks is insolvent. So, economic viability seems to be the reasoning they are offering. He also stated that he is "unable to further manage Zadeh Kicks in accordance with its articles and operating agreement." In some cases, an LLC can be voluntarily dissolved without the courts getting involved, however managing the numerous creditors, assets/sneakers, and claims here make this special.
In order to voluntarily dissolve an LLC, one must first refer to the articles of organization and operating agreement to see what is necessary. Here, Zadeh Kicks is the sole member of Zadeh Kicks LLC. As such, he did not have to get approval from other members and could really change whatever operating agreement or documents he had (if any were created in the first place) to allow him to file to dissolve the LLC.
In the Petition, Zadeh Kicks asks for the court's assistance and oversight to wind down the LLC, liquidate any available assets to creditors or claimants, and to appoint a receiver to take any action required to preserve or liquidate the assets. It is interesting to note that Zadeh Kicks proposed the appointment of David Stapleton as the receiver, who was ultimately approved by the court.
This is an ongoing judicial proceeding with a receiver and is expected to take time to resolve and wind down the LLC.
What victims can do to try and get their money back from Zadeh
*For sake of clarity, nothing contained in this article is financial or legal advice. This is purely for informational purposes.
If you were among the victims affected by this recent news, you’re probably asking yourself, “Will I get my money back?”, to which the answer is - it depends. For those impacted, here are some different buyer scenarios and action steps for each that you may want to explore taking in an effort to recover lost funds.
PayPal transactions less than 180 days ago
If you made any recent purchases from Zadeh Kicks’ website using PayPal within the last 180 days, your purchase falls within PayPal’s 180-day Buyer Protection window. If that’s the case for you, call PayPal and simply file a dispute for any unfulfilled Zadeh Kicks orders. Be sure to elect to escalate any disputes to claims, and then just wait for the time to run out and you'll get your refund from PayPal.
PayPal transactions over 180 days ago
First things first, call PayPal and inform them of any unfulfilled Zadeh Kicks orders you wish to dispute. Plenty of other Zadeh Kicks victims have likely called and reported their disputes as well, so chances are that the PayPal representative may very well already be aware of the overall situation. The PayPal representative will probably put you on the list as well and tell you that they will reach back out to you in the next 48 hours. If they tell you that they are unable to help you because your transaction was past 180 days, it’s worth hanging up and calling again - the representative is a hit or miss and some are more willing to help than others. If they refuse to accept your dispute because it has been over 180 days, at least you gave it a shot. There’s no harm in trying to recover your lost funds - it’s worth a try.
Credit Card
If you used a credit card, the chances of you recovering any lost funds are very dependent on your card issuer. For example, American Express tends to side with their members so if you used an AMEX, you probably have a high likelihood of getting your money back if purchase was within the last few months. Regardless of your card issuer, reach out to them and explain the situation. The worst thing that happens is that they deny your claim. Best case, you get your money back.
PayPal Balance
Unfortunately, if you made a purchase using your PayPal balance and the transaction was over 180 days ago, you’re probably out of luck - but again, worth reaching out to PayPal and trying to submit a claim. It can’t hurt.
Debit Card
Much like purchasing with PayPal balance, customers that purchased with a debit card are going to have a tough time getting a refund. Debit cards often don't provide purchase protection. That said, reach out to your bank and explain the situation. It is important to start a paper trail.
Criminal investigation by the FBI
On May 25th, 2022, Zadeh Kicks sent out an update email to customers. The short version, the receiver (Stapleton Inc.) is asking disgruntled customers to bear with them as they sort things out saying they are in the process of standing up a hotline for customers with issues.
As part of the email, Stapleton Inc. also mentions that they are cooperating with the FBI in a criminal investigation into Zadeh Kicks' business. No other details regarding the investigation are shared. In closing, Stapleton asks all customers that feel they were a victim of Zadeh Kicks to contact the FBI at 1800-CALL-FBI or tips.fbi.gov.
Zadeh Kicks' situation from around the web
