Since I wrote on Tuesday about the beleaguered state of Oddbins, there have been further developments. Off License News now reports that "Oddbins has applied to the courts go into administration to stave off winding-up orders from creditors ahead of next Thursday's meeting to vote on a proposed company voluntary arrangement. The company described the move as a "precautionary measure" and said its remaining 89 stores would continue to trade."
This measure effectively gives Oddbins a 10-day immunity against any winding-up orders, allowing for the vote on the proposed Company Voluntary Arrangement (CVA) to go ahead as planned, at a meeting of creditors on 31 May. However, unless the terms of the CVA are accepted at that meeting by at least 75% (in terms of value) by the creditors, then the company will almost certainly be forced into formal administration.
Bizarrely, British Gas appears to have played a significant role in forcing Oddbins' hand, since they are one of the companies (or perhaps even the only company) to have apparently applied for a winding-up order against Oddbins. The list of creditors on Deloitte's CVA document shows British Gas Business to be owed the princely sum of £57.65. Which seems a little strange, because business regulations normally dictate that a debt of at least £750 be outstanding before any single creditor can apply for such an order. Following a little digging, the intrepid Jim Budd now reports on his excellent blog, Jim's Loire, that the explanation for this is that "the amount listed as owed to British Gas excludes estimates." Whatever that means is anybody's guess - although it isn't inconceivable that the reported total debt of around 20 million Pounds is a rather conservative estimate.
Either way, the future for Oddbins now appears very bleak. Even if they manage somehow to stave-off formal administration in the short term, actually having any wine to sell may prove rather difficult. The problem is, having treated their suppliers (both wine growers and UK importers/agents) so shabbily, why would those same suppliers ever want to to do business with Oddbins again in the future - especially if they are forced to accept just 21% of what they are already owed (and over a 4 year period, at that)? There is simply no longer any basis for trust or goodwill. If, as reported elsewhere, the Oddbins management are so confident that they can re-build their business, why not show a clear resolve to (eventually) pay back 100% of what they owe? Anything less is unsatisfactory, but 21% is quite frankly an insult.
Always assuming that their existing suppliers do what they are being asked to do and cut their losses, who on earth will take their place in the longer term? No sensible grower would touch them with a bargepole ,unless it was on a strict "payment with order" basis.
I take no personal pleasure from reporting on the seemingly inevitable demise of Oddbins - too many people will lose their livelihoods and too many honest suppliers will face severe financial difficulty. As I said in my previous post, I am one of the countless enthusiasts for whom Oddbins played such a huge part in starting my love affair with good wine, and it is sad to see a once-great retailer fall so spectacularly from grace. But that was then - and this is now. And apart from the name, there really is little left for us sentimental wine lovers to lament - except for the fact that the dreaded supermarkets will now have even less competition from the high street.
For another take on the subject of Oddbins, including some rather damning comments by the trade, see the report entitled Suppliers being 'asked to fund Oddbins rescue' on the Harpers Wine & Spirit website.
9 comments:
Hi leon
Thanks for the update.
this made me want to look at was still happening with threshers.
here is the latest report http://www.threshergroup.com/AdministrationDocs/Second_Progress_Report.pdf
Paragraph 3 shows the administrators costs,So far almost £12 million.
rather chilling reading overall,especially for the creditors.the pension fund looks to be fairly safe.
Bernard
Very interesting reading, Bernard. As usual, it looks like the biggest winners are the lawyers. I see that NDS managed to recoup everything they were owed (£4.5 million, with a further £1.5 million left over to pay into the administration fund) by the sale of non-ROT stock.
The big difference here (in comparison to the Oddbinns situation) would seem to be the supplier situation. Apart from the obvious loss of future businees with First Quench, I can only assume that they were paid for all the wines they supplied, since no unsecured creditors are listed. The main creditor appears to be Barclays Bank, with the floating charge of £13.5 million, but (unless I am reading it incorrectly) there appears to be enough in the pot (due mainly to post-administration trading) to get everything paid-off(?) I guess the shareholders will be the real losers in the long run.
In a different economic climate, and with a more buoyant commercial property market, the disposal of those 1400-odd retail premises would have realised a far bigger return. But with so little scope for the creation of new businesses, there can be little demand for taking-on the fag-ends of all those short-term leases.
Glad to see the pension fund appears safe, though (I assume you have somewhat of a personal interest where that is concerned).
There appear to be many similarities between the First Quench and Oddbins situations (not least of which are the outmoded and ill-thought-out business models). The big difference, of course, is that First Quench weren't using their suppliers' money to shore-up a doomed business.
Still - it makes you wonder.... with the Thresher empire gone, and now the seemingly inevitable demise of Oddbins, surely the supermarkets and the likes of Laithwaites can't *completely* fill the void. Perhaps there's a future for small independent wine shops, after all!
from what I read the unsecured creditors amount to £64 millions worth of claims and it looks like they'll get Less than 1p/£1.
I have no connections with threshers pension fund,I worked mostly part time to start with so not opened to me.
Not sure why they went down so quickly,it didn't look like they were hemorrhaging money.
NDS had the stock as security and were never going to give it up before they were covered.
They should have gone into convenience in a big way as most or their shop are just this now.
As for Oddbins I think it's a shame I also have fond memories,especially the 1988 wine fair.
B
Threshers too? I really need to get home to England more often :)
Thanks for the update.
Bernard - obviously, I am missing something in the administrator's report. £64 million? I can't see figures like that mentioned. Of course, if that is the case, then it would put the Oddbins thing into perspective.
Vinogirl - the Thresher thing happened around a year ago, I think. Not that many places to buy wine on the high street now. :-(
Leon
Page 9,Liabilities 4.3
I see that the administrators have managed to spend £167 000 on telephone,telex and fax since the company going under!
B
Ah yes - I see what you mean, Bernard. However, the current surplus in the admin fund appears to be £10m, presumably with much more stock still to be sold, so I assume the surplus could rise significantly. Which seems to suggest that unsecured creditors will get significantly more than that 1%, once the admin has been completed and the company wound-up(?) Unless someone more au fait with this sort of thing can shed more light on it.
Hi, I am a former employee of Oddbins and paid into a pension scheme for many years.
Does anyone know how I can find out what my entitlements are and how/when I can access them?
Thanks.
Anon - I'm surprised this hasn't been cleared up by now. I would suggest you contact Deloitte, who were the company dealing with the winding-up of Oddbins. You may also wish to enquire on the wine-pages forum, where there may be a few other members in the same boat as you.
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