Vini funded 3 times on Seedrs - a total of £670k invested. At the end of last year they gave up and called in the Admin Boys. But not before one of them had set up a newco, B Wines, to phoenix the company's assets whilst off loading its tiresome creditors.
You cant really blame the system - those are the rules. Under normal conditions and with a working moral compass, these pre packs can work out to the benefit of creditors. But when you leave trade creditors with outstanding debts of around £700k, one has to question the logic, let alone the morality. The current rules cannot cope with the 21stC.
The story of the collapse is typical of ECF and is one we have repeated many times on here. Overtrading and very poor management. Chronic cash shortages and no one (stupid enough) to refinance at the last minute. The company and its assets were sold for £150k, which along with the cash, paid out the only secured creditor.
But the CEO was looking to do this before it happened and was told by the administrators that they had to market the company first! Instead of closing the loss making, most recent unit, he just shoved the whole thing, its creditors and investors, in the bin. Waited a few weeks for his offer to be the only one available and hey presto Sig. Cernecca is now the proud owner of a debt free company. Meanwhile pages worth of creditors, large and small, are scratching their heads wondering why they have lay off staff.
In the end all of this was facilitated by Seedrs, an FCA regulated ECF platform. Three times. In fact the administrators report identifies the exact action which put Vini in real trouble. In 2017, just after the final raise on Seedrs, they opened another unit in Greenwich. What was projected as a quick profit turning unit, was a disaster. People in Greenwich, it turned out, had a lower average spend than in Covent Garden and South Ken. Who knew that? Before this, the company was starting to make some progress, albeit slow. The capex and losses in Greenwich sank the lot.
The lesson has to be that investors must be more savvy, they need to know that they doing. And platforms have to be willing to say no to a company like Vini, which had already been twice, when the company situation at the start of 2017 was obviously highly precarious. That means they have to be willing to give up their commission for the greater good. Is that ever likely under the current rules? No. It sure does make a joke out their claims to be diligent.
Hmm, I believe Vini's Jan 2017 equity raise was a private round. Although Vini used seedrs to facilitate the raise, the campaign was not public and not available to the crowd. The £334k raised in Jan 2017 was from just 12 participants. Also, The £28k raised in 2015 was from just 19. So this was hardly a crowdfund.
ReplyDelete(I found these numbers by searching the old campaigns on Seedrs website.)
The financial outcome speaks for itself, Vini was clearly a poorly run business. And yes, founders buying their businesses back via pre-pack and leaving creditors high and dry is abhorrent.
So I do agree that regulation/ law should change to prevent founders doing this, But IMO this is not an example of any failing by Seedrs.
We have plenty more examples! Coming out soon.
DeleteHmm.....not sure where you get your information but the Vini 2017 Seedrs page is till there to be viewed. My guess is that if it was never public it wouldnt be - ?? So looks like it was an open raise not private.
DeleteThanks - I didnt know that. How do you know that? At any rate Seedrs have it in their hall of fame as a raise so it is an ECf raise. And more importantly Seedrs facilitated it and it resulted in large numbers of creditors losing large sums of money. How is that not Seedrs' fault??
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