Brands & Merch Business News Legal
By Chris Cooke | Posted on Wednesday August 31st 2022
The founder of Awesome Merchandise – the Leeds-based merchandising printing and production company which has many clients in the music industry – updated people who have invested in the business through the platform crowdfunding crowdfunder Crowdcube after the company was confirmed to have gone into administration.
Speculation that there were issues with the merchandise had been mounting in recent weeks as complaints about problems with orders and refunds grew online. Clearly, in music, a significant portion of merchandise trade is tied to live activity, which means demand for services from companies like Awesome has plummeted during the COVID pandemic. And that apparently created challenges for the company that were ultimately insurmountable.
That said, Awesome’s core business will continue to operate through so-called pre-pack administration, which basically involves setting up the sale of an insolvent company’s assets before the formal appointment of directors. When this approach is used, the buyer is often another entity controlled by the directors of the insolvent company, and this is the case here, the buyer being Print.inc Group Limited, a new company created by the founder of Awesome, Luke Hodson.
Confirming that this agreement had been completed, one of the directors appointed by Awesome Merchandise Ltd, Nick Holloway of Interpath Advisory, said: “We are pleased to have concluded this transaction which guarantees continuity of service for customers of Awesome Merchandise and, above all, protects a number of jobs”.
Meanwhile, fellow admin Howard Smith provided a little more insight, adding, “Awesome Merchandise is a bespoke business with strong B2B relationships in the music industry which unfortunately like many others companies, has experienced significant financial difficulties as a result of COVID-19. We are delighted to have completed this transaction which secures the future of the company, as well as safeguarding the jobs of 94 employees working from the head office of Leeds’.
Although the quick sale to Print.inc Group Limited should reduce the negative impact of administration on employees and customers, it obviously does not help people who invested in the Awesome business through a Crowdcube campaign in 2018 As the merchandising business approached its tenth anniversary, it raised over £650,000 on the crowdfunding platform to fund its expansion, including into the US market through a base in Austin, Texas.
Because the Awesome company has gone into receivership, these investors won’t get their money back and won’t see any returns. A spokesperson for Interpath confirmed to the Yorkshire Post: “Crowdcube backers as equity investors will not be among the unsecured creditors.”
Hodson informed these investors in a post on Crowdcube’s website late last week, saying, “It is with a heavy heart that the Directors were appointed to Awesome Merchandise Ltd today. Awesome Merchandise Ltd has been heavily impacted by the pandemic, reduced market activity, internal and external factors”.
“Lately,” he explained, “I’ve been quiet on Crowdcube due to admin duties, which means my legal responsibilities have focused on one creditor, while trying to find a solution. with a team of advisers. Unfortunately, a solvent solution has not been found despite months of efforts to refinance, find investments or sell the company”.
“Awesome Merchandise’s website, assets and intellectual property have been purchased by Print.inc Group Ltd,” he added. “This will allow the factory to remain open and customer orders to be fulfilled. The current work in progress has now been taken over by the new company and will be processed over the next two to three weeks. Credits will be offered to customers who have canceled orders. The jobs of 93 employees have been safeguarded and will be transferred to Print.inc Group Ltd”.
“I am deeply sorry that I was unable to lead Awesome Merchandise Ltd and its investment in the Crowdcube community to a successful exit or return on investment,” he continued. “Many investors, big and small, are close friends and family. Many more are long-time customers, partners and suppliers.”
“Awesome Merchandise Ltd was the almost single focus of my life for seventeen years,” he continued. “There are many factors that contributed to the administration and a more detailed report will be made by the administrators.”
“Those of you who know me personally have a good idea of the circumstances and pressures I have worked under for a long time and this administration is something I have done my utmost to avoid. I have worked to find another solution than this, because of the impact it will have on investors and creditors, but nothing else has been offered”.
“I am grateful to everyone who has supported the Crowdcube [fundraising] and for the team that has worked in difficult circumstances for the past two years during the pandemic,” he concluded. “It reassures me that the tremendous support we have received over the years will not result in total waste.”
Responding to criticism from some of Crowdcube’s investors regarding the sale of Awesome’s assets to Hodson’s new company via the pre-pack administration, he then wrote: “Funding for the new company came from outside of the family, after all other avenues have been exhausted”. .
“I am extremely grateful that my family helped out at the last minute,” he added, “to give me a chance to continue working in a field that I am passionate about and I believe I have helped benefit the UK print and creative markets as a whole. My family’s belief in it ultimately helped save over 90 jobs.”
He then said: “Three weeks ago today I was in a position where I had to completely liquidate the business. The transaction that was concluded had to be subject to a lot of diligence and external audits, it met the requirements set by law. It was the last type of agreement or option left open”.