On Thursday morning at the Mermaid in Blackfriars, London Oddbins' many creditors (owed more than £20 million) – ex-staff, suppliers and HMRC (Her Majesty Revenue and Customs) – will be asked to approve the CVA (Creditors Voluntary Arrangement).
Time surely to put sentiment aside and vote against the CVA. Thus forcing Oddbins into administration.
Putting your money where your mouth is
Rather than finance going into Oddbins the company has had to pay off installments on the debt incurred by Ex Cellars Investments Ltd when they bought Oddbins Ltd in August 2008. In April 2007 Oddbins had already given Nicolas UK Ltd an unsecured loan of £17.7 million as asistance to buy shares.
Keeping your suppliers in the picture?
When asked why he had not communicated the chain’s problems to suppliers in January, Baile said: “At that point we had a strategy in place that would allow the business to improve. However, once it became clear that this was not going to happen, we had to make a decision.”
Baile doesn't spell out what the improving 'strategy in place' was, but it might have been to just gloss over the mounting debts. It would be very interesting to know what concerned suppliers have been told and promised over the past few months.
In early December 2010 Richard Verney, Oddbins respected head buyer, quit the company to 'pursue new challenges outside of the company' according to the official press release. Four months later we have heard nothing of these 'new challenges'.
Isn't there perhaps another explanation for Verney's decision to quit Oddbins. Aware of the company's increasingly parlous financial state and concerned that Oddbins might be unable to pay their suppliers for orders placed, Verney decided that enough was enough and that he could not honourably continue.
Des Cross the finance director/commercial director also left Oddbins in December.
Ex-staff as creditors: £686,231
2008 Ex Cellars: 2 shops. 2011: 4 shops.
With no apparent new investment going into the business accepting the CVA is surely only a short-term measure that may just build up further debt. Better to vote against and go into administration while there are still some assets left? It might also allow part/parts of the business to be sold as a going concern with some Oddbins jobs saved.
Please see next post for the list of questions I would want answered if I was an unfortunate Oddbins' creditor.