Crowdcube's Cashmere Crumpet tries the Double Phoenix!!

This is a truly incredible story.

Back in 2014 Crumpet Cashmere pitched on Crowdcube. The pitch made little mention of the real circumstances behind the business. In fact it totally ignored most of the it.

The management team had started a company called Crumpet England which had got into trouble, so they used the prepacked deal route to off load the debts and start afresh. Crumpet England went down in flames owing over £750,000. The prepacked charged Crumpet Cashmere to pay £60k for the old assets, brand etc. The management of both companies were the same.

At the time that Crowdcube published the pitch for Crumpet Cashmere, the administrator's report shows that the management were in default of this payment for the old assets - or put simply they hadnt paid up. The administration had had to be extended to accommodate this default and had been forced to issue a Statutory Demand. 

These facts were never mentioned in the Crowdcube pitch. At the time this information was hard to get hold of for ordinary punters as the CH beta site wasnt running then. Chances are none of the investors knew of this default.

This is how the Crowdcube pitch described the collapse of Crumpet England in the Crumpet Cashmere pitch -

''During latter part 2012 and 2013, the business with the support of professional  advisers, undertook an in depth review of its activities and structure, which resulted in significant cuts to costs and overheads''.

The 'business plan' published in conjunction with the experts at Crowdcube states that Crumpet Cashmere had bought the brand in January 2013 - a fact we now know is rubbish. Caveat Emptor will no doubt cover any liability.

Only when questioned by us on the forum did they admit the pre packed deal part. By significant cuts we assume they meant leaving behind all their creditors. In essence investors in the Crowdcube pitch were having their investment in Crumpet Cashmere used to pay for the prepacked deal with Crumpet England - without their knowledge. 

This could have been useful information, given what we now know. Crumpet England was finally closed in October 2014, some 6 months after Crumpet Cashmere was already losing investors' money. Less than 12 months later, the money had all gone and the management team were looking for the next out.

Ruby and Rudy was incorporated on the 25 August 2015, just around this time. It has the same management team as both Crumpets. According to the liquidator for Crumpet Cashmere, its assets were sold to R&R for £3,000 before the company went into liquidation. The management team claim this was in the best interests of creditors. Creditors who according to the liquidator will receive nothing. 

All of this sad saga could easily have been avoided had the Crowdcube out to lunch dept been awake. Armed with the full story it seems likely that the pitch would have failed. This would have saved investors £160k and yet more creditors another £260k. 

We helped the Times put together a piece on this which came out today -  http://www.thetimes.co.uk/tto/business/industries/consumer/article4656180.ece 

Luke Lang of Crowdcube commented  - '' Investors can be assured that we are committed to ensuring transparency and have rigorous due diligence processes in place.” Phew that's fine then, we were worried things had got out of control.