MEEM's Pre Pack Administration hits some turbulence in the year they should be making £25m profit

MEEM raised over £700k on Crowdcube and then went into administration. One of the secured lenders to the company who has now been repayed, is one the directors. In a pre pack deal, most of the remainder of the outstanding debts has been passed onto the newco - a total of over £1m; £830k of which is from employer liabilities.

However the pre pack and administration has been stalled as two of the company's shareholders are considering or are taking, legal action against the company directors. No detail is given but one can assume it's not because they behaved normally.

We wrote about MEEM's collapse and pre pack deal here. Crowdcube's great facilitation just keeps on rolling. This year MEEM was due to be making over £25m in net profits according to the Crowdcube 2015 projections. Shame.

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
Creditors                                           £435,000

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.

MEEM in a MESS

Well it turns out that MEEM SL HAD to close and then re open as MEEM Memory because the major shareholder who invested £250k via Crowdcube was being such a pest.

This might explain why one of the Directors took out a charge over the IP of the original MEEM just months before they chose to close?

Is that in anyway legal?

MEEM SL (the now defunct MEEM) which was happy to take Mr Goel's  £250k when they needed it to complete their pitch, is now offering all Crowdcube shareholders the same size of holding in the new MEEM Memory, which seemingly now owns the IP. They are also offering a very generous 30% bonus.

Do you suppose this is coming from Mr Goel's holding?

All fairly incredible.

This Crowdcube mess you are simply not going to believe

MEEM SL Ltd raised £700k on Crowdcube a year ago - see here 

We were initially contacted by a shareholder who had been sent a letter by Robert Brent the CEO. This letter dated 19 May stated that MEEM SL had been forced to close as of the 6th April. However the good news was that all shareholders were being offered free shares in a new company MEEM Memory, with a 30% increase in their holding. 

Bear with us, this one is a cracker!!

There was no explanation as to where the £700k had gone. According to the Crowdcube raise, the directors had stated they would not pay themselves a salary for the first year and the IP, the real value in the company, had already been paid for.

Further to this, MEEM SL had just completed a Kickstarter campaign, successfully raising over £50k on the 9th of March. 

Again further to this, one of the company directors had taken out a charge over the IP of the company, registered on 25 February 2016. There was no mention of this charge in the Crowdcube or Kickstarter pitches as far as we can see.

NOW IT GETS REALLY INTERESTING

As if all of this didnt already stink like the old Billingsgate market, we were contacted today by another MEEM SL shareholder (we'll call them OMG for clarity) - someone who had invested via Crowdcube. In fact they had invested in more than one company on the platform.

They wanted to know where we were getting our information from about MEEM SL and Memory, as they had had no correspondence from the company or Crowdcube. This shareholder had a holding considerably larger than the one owned by our first reader. They checked spam folders etc but nothing. 

How is that possible? How could both the company and Crowdcube miss an investor off the list when sending out such an important communication? How many more investors have been left in the dark? What in God;s name is going on here?

OMG had been asked to invest by Robert Brent, not once but twice, in the Kickstarter campaign only a couple of months ago - so he had the right email. In fact in the last email on this he sent out, he asked OMG to rally family and friends to put their money in as well. 

We are still attempting to understand how a company that was clearly on the verge of bankruptcy was able to pitch and raise money on Kickstarter or when the decision was made to scrap MEEM SL and create MEEM Memory. We are also trying see what happened to the £700k and answer the key question Robert Brent avoided, why was it necessary to close MEEM SL.

Of course Crowdcube will come out with their usual drivel but anyone with a brain has to be asking if they can allow this to happen what else are they making a total mess of. 

MEEM get their cables crossed

MEEM SL Ltd raised just over £700k on Crowdcube in June 2015

Now they have gone into administration. 

This has to be one of Crowdcube's fastest success to failure stories?

Ah but there is a twist. 

A letter sent to shareholders explains that the company had to go into administration, it doesn't say why. But a new company MEEM Memory has galloped into the void to buy the assets of the old one. All the creditors have been paid off, according to the letter, although there is no report yet from the Administrator. MEEM Memory now owns all the IP of the deceased MEEM SL.

Shareholders in MEEM SL are being offered the equivalent shareholding in the new company at no charge, plus apparently a 30% bonus holding. How that works is anyone's guess.

There is no talk of funding or what happened to the £700k put into the old company only months ago.

As you would expect the Crowdcube vetted financial projections bear very little resemblance to the accounts now filed at CH. They never do.

All a little odd.