Oddbins agrees to restructure debts - company still profitable, directors insist
- Friday 11 March 2011
Under the terms of the CVA, a formal process ratified by the courts, 75% of Oddbins creditors’ must agree the arrangement. Once agreement is reached, the business and debts will be reorganised, with creditors being paid a proportion of money owed over an agreed period of time.
Oddbins managing director Simon Baile insists the business is profitable, though he admitted the company, which has been under continuous pressure from adverse trading conditions, ‘cannot continue in its current form’.
He said, ‘We have proven through 2009 and 2010 that Oddbins is a relevant brand in the market and, despite continued tough trading conditions, we have been able to grow like for like sales, increase transactions and bring more customers through the door; raising the average bottle price in 2010 to just under £8.00.’
In a statement Baile said, ‘to maximise creditors’ recoveries generally, it is the Directors’ view (on advice) that the company should enter a Company Voluntary Arrangement, details of which we will be sending out shortly.’
Baile confirmed that the ongoing dispute with Nicolas UK over the sale of the business, has had 'an enormously negative effect on the Company’. Nicolas is part of the French company Castel which owned Oddbins between 2002 and 2008.
Earlier this week Oddbins announced the sale of 39 ‘unprofitable’ stores. The Oddbins retail estate now stands at 89 shops, including 4 branches in Ireland and the online and wholesale businesses.
In cases of this kind, it is in the interests of creditors to agree to the CVA, Keith Steven of insolvency practitioners KSA told Decanter.com.
‘Under the terms of the arrangement, creditors might get around half the money owed – say 50p in the pound for the sake of argument. If they didn’t agree to the CVA and the company went into administration, they would see a fraction of that.’
Once the process is complete, Baile told Decanter.com, the focus would be on replenishment of the shops - which would involve some resiting of stock from closed stores - and 'trading hard'.
'The dynamics don't need to change. We've got a good range, great locations and great staff. We have a great future - there is definitely room for Oddbins on the UK high street.'