Creditors to lose millions

08 January, 2010

KPMG has offered First Quench trade creditors just 1.45p for every pound they are owed.

Creditors voted to accept the recommendation at a meeting in London this week.

The settlement means that largest creditor Percy Fox will receive less than £20,000 of the £1.35 million it is owed.

Other major drinks firms are also set to lose out in a big way, with Hatch Mansfield owed over £800,000, Bollinger Champagne firm Mentzendorff claiming combined debts in the region of £490,000, and Diageo GB £576,000.

The complete list of creditors runs to 18 pages of documents and includes small drinks companies, ice cream producers,

ocal councils, consultants, IT firms, car rental operators and a florist.

The low settlement could threaten the viability of many smaller drinks suppliers owed five or six figure sums and have severe repercussions for the whole industry in the year ahead.

Preferential creditors, essentially First Quench staff owed wages or holiday pay, would also be paid in full.

In what could be the last flurry of sale activity by KPMG, Staffordshire-based SEP Properties has bought the Victoria Wine, Threshers, Bottoms Up and The Local brand names to go with 23 stores it has already bought from KPMG.

The company plans to relaunch Threshers as an online operation and franchise the other brands.

In addition, eight shops have been sold

to Spar, five to Southern Co-op and one to Scotmid Co-op.

There was good news for franchisees who have been freed from their contracts by administrator KPMG, subject to agreement on a final price.

KPMG’s appointed property agent, Christie’s, has given a flat rate valuation of £10,000 to the head lease for each business, which would allow franchisees to continue to trade from existing premises as independents.

Blake Lapthorn, the law firm representing a group of 52 franchisees, has asked another agent to give bespoke valuations for each business in a bid to get the price down.

Lawyer Geoffrey Sturgess said the blanket valuation was unfair given the differing locations and pending repair bills attached to some properties.

The franchisees represented by Sturgess had originally offered £1,000 per store to KPMG, which was rejected?.

Documents filed by KPMG at Companies House suggest franchisees collectively owed First Quench £2 million at administration in October.

They also reveal that First Quench directors considered entering a company voluntary arrangement before entering administration.

This would have allowed the company to continue trading, paying off debts at an agreed rate from future profits.

The move was dismissed because it would have involved closing some stores – impacting the remaining estate’s ability to buy stock on terms good enough to guarantee respectable profit margins.

KPMG’s own time sheet shows its administration fees at £3.5 million, an average of £376 for each of over 9,000 person hours.

The combined figure raised from the various sales of store packages before Christmas, and the Wine Rack name, was £1.7 million. The cost attributed to business sale by KPMG was £552,000.

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