UK: Oddbins on a knife-edge as debts revealed
- Date set for creditors' meeting
- Retailer owes GBP8.6m to customs body
- Legal dispute may damage repayment plan
Oddbins owes Her Majesty's Revenue & Customs GBP8.6m
Oddbins' fate looks set to be decided by a meeting of its creditors at the end of this month, as fresh documents detail the extent of the beleaguered wine retailer's debts.
Creditors will meet on 31 March to decide whether or not to accept a cut-price repayment deal that would keep Oddbins afloat. If they reject the retailer's proposal of a Company Voluntary Arrangement (CVA), then the company faces administration, according to documents released this week by Deloitte.
Oddbins has so far failed to secure outside finance, including via a possible sale of the business, Deloitte said. Meanwhile, the group's legal dispute over money owed to its previous owner, Castel Freres, is adding extra pressure to its financial position.
Last week, Oddbins' MD, Simon Baile, confirmed to just-drinks that the group would propose a CVA to creditors. He said that Oddbins' core business, excluding the 39 stores that it intends to close, is profitable.
Poor Christmas trading and a lack of cash have brought Oddbins' troubles to a head, although losses inherited from Castel have dogged the firm since Baile acquired it in mid-2008.
According to Deloitte's records, the retailer owes GBP20.7m (US$33.3m) to unsecured creditors, including the UK customs body, HMRC, which is owed around GBP8.6m. Within the drinks industry, Vina Concha y Toro is owed GBP241,000 and Pol Roger is owed around GBP134,000, while Diageo is owed GBP84,000, Pernod Ricard GBP90,000 and the distributor First Drinks Brands is due GBP75,000.
Oddbins' CVA proposes to pay unsecured creditors GBP0.21 per GBP1 owed. By contrast, if Oddbins fell into administration, Deloitte estimates that creditors would only receive GBP.0.13 per GBP1 owed.
However, Oddins' legal dispute with Castel, which owns wine retailer Nicolas UK, poses a risk to the amount of money unsecured creditors stand to receive as part of the CVA. Oddbins' calculations are based on a payment of GBP587,000 to Nicolas UK as an unsecured creditor. But, the sum owed could change significantly if Oddbins fails to win the legal dispute, which is currently pending in the UK's High Court.
According to Deloitte, Oddbins and Nicolas are locked in a dispute over GBP1.46m in "indemnities".
Last week, Baile declined to offer specific details on the dispute when questioned by just-drinks, but he confirmed that it relates to monies owed as part of his takeover deal with Castel in 2008. As part of that deal, Castel negotiated a floating charge over Oddbins' stock. Castel has declined to comment on the case.
At the 31 March meeting, Oddbins needs three quarters of creditors to approve the CVA proposal for it to be enacted.
Baile has called on creditors to support the CVA plan. "We've got a cracking business here and we deserve the chance to trade unencumbered," he told just-drinks.
Pernod Ricard is maximising the sponsorship of the Rugby World Cup by its New Zealand wine brand, Brancott Estate, through the launch of a global advertising campaign....
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