Friday, 17 June 2016
MEEM's pre pack deal revealed
MEEM SL raised over £700k on Crowdcube only last year - we have already written about its strange demise on here.
Now we have had sight of the final Administrators proposals for its winding up - which as pre packs go makes for interesting reading.
This was a company that put itself into Administration and then offered to buy itself out of administration - nothing too unusual about that. However the figures involved give us cause for some concern.
According to the documents, MEEM SL had debts of -
Employee liabilities under TUPE £830,000
The agreed deal whereby MEEM Memory, as an associated party, is for MEEM Memory to buy all of the old company for £185,000 (used to pay off some creditors) and take on the liabilities listed above of just over £1m. apparently according to the administrator this is the best outcome for creditors.
So MEEM Memory starts its life with a over £1m of creditors. This, dont forget, is a company that could not as MEEM SL raise anymore capital (according to the Administrators) and had to go into Administration. As the Administrator's report states, it is pre revenue.
Ignoring the obviously ridiculous valuation that MEEM SL attached to their own IP when they raised money on Crowdcube, the loss of £700,000 in cash in 12 months, MEEM Memory appear to be starting with a large noose around their neck. Why if MEEM SL couldnt pay the creditors does the Administrator think MEEM Memory can?
The IP of this compnay was self valued at £855,000 by the management. In Administration the real value of the IP was put at between £30,000 and £140,000. How on god's earth is that possible?? And yes you have guessed it, this £800,000 valuation appears on the carefully checked pitch figures given on Crowdcube
Shareholders have been offered shares in the new co, which it seems reasonable to assume they will take up FOC. This will clearly also burden the new co with a shortage of usable equity to finance its precarious position.
All pretty odd.