Analysis: Oddbins’ potential rescue plan
Rumour that high street wine retailer Oddbins may be rescued (for the second time in ten years) by the owner who placed it in administration four months ago came as a surprise this week. db looks at some of the questions the proposed rescue deal poses.
The news that the owner of wine retailer Oddbins may rescue the retailer out of administration, came as something of a surprise over the weekend. As yet the report is unconfirmed and details of the offer appear to be thin on the ground, but db has pieced together some of the salient points around the retailers’ apparent demise, and what a possible rescue plan may involve.
What exactly is the rescue plan and how might it work?
The reports published by the Press Association simply stated that the administrator was in ‘advanced talks’ with Walsall-based European Food Broker Ltd’s (EFBL) owner Rajinder Chatha to “take back control of most of the business”, but it was unclear what a proposed sale might prove to be, with Duff & Phelps and Oddbin’s parent company EFBL telling db that no comments are being made at this stage.
However documents recently filed at Companies House have thrown some much needed light on the situation, outlining the financial state of the companies and confirming what steps have been taken during the administration process to minimise losses and maximise returns for creditors, as well as the preferred options for the companies.
One of the most notable points it states is that only 58 out of the original 102 stores are still trading, following the closures of 45 unprofitable stores by the end of March in an effort to stop haemorrhaging losses.
Of these stores, 13 stores were Oddbins outlets (the trading name of Whittalls Wine Merchants 1, in England and Whittalls Wine Merchants 2 in Scotland), with a remainder falling under the auspices of sister company Wine Cellars Trading Limited (WCTL), which trades under the Booze Buster, Simply Drinks, Oddies, and Shop2Go fascias, and the immediate parent company EFB Retail Ltd, itself a subsidiary of EFBL.
The preferred option is to sell the retail business as a whole, and although the report indicate that more individual stores may be sold it seems that at least some of the remaining Oddbins and WCTL stores will be saved if the proposed deal goes ahead – providing that landlords can be persuaded to agree terms going forward. Bearing in mind the report states that leases on the estate were not paid in the last quarter of December 2018, and several landlords and local authorities threatening legal action over the unpaid rates and rents, this may be quite a bit if.
There were, it notes, a number of approaches for the sale of the whole business, but since March, one preferred option has been actively pursued. Assuming that this is the option alledgedly on the table, how does that work in practise?
It is not uncommon for a company to buy back parts of a business that it has placed in administration and liquidated, but in order to do so it would need to operate under a different company, avoiding a similar name to the old company so as not to lead to possible confusion of creditors of the old company. So perhaps it is worth noting that in January this year, two companies were incorporated at Companies House, Wine Retail Limited and Wine Retail Holdings Limited, with the company directors named as Ayo Akintola and Balbir Singh Chatha, the two directors of EFB Retail Ltd.