Background
I-Vapo Limited are a Cambridgeshire-based company operating in the e-cigarette space with 21 retail sites, a testing laboratory and manufacturing plant (for production of e-Liquid). The company was founded in 2013, has approximately 73 employees and a turnover of £4 million.
Issue
Following a significant investment in its laboratory facility the Company did not achieve the anticipated level of turnover (due to a lack of compliance with EU legislation in relation to testing). Liabilities were approximately £1.8 million; including a secured liability of £135,000 and HP liabilities of £447,000.
The Company had been threatened with a winding-up petition by HM Revenue & Customs over the Christmas period, and had sought insolvency advice from another provider (without liaising with the charge holder). The charge holder introduced Quantuma at short notice to take control of the position.
Outcome
We rescued the company within 24 hours of our appointment on Tuesday 23rd January 2019.
We implemented a full accelerated marketing strategy with competing bids from the incumbent management and a third-party.
Secured creditor’s claim were fully mitigated by way of novation to the new entity together with the novation of the majority of HP agreements in place.
We enabled Joint Administrators to investigate and pursue a potential £1m counter claim arising in respect of a challenge to the VAT rate applied to e-cigarettes/e-Liquid. If successful unsecured creditors will receive a significant uplift on their potential recoveries.
We secured the sale of the business, protecting the futures of 21 retail sites and all 73 employees.
Quotes
Carl Jackson, Founding Partner at Quantuma said “Financial issues arose due to significant investment in the company’s technical division which was not ultimately supported by sufficient turnover to cover costs. But we have managed to sell the company’s business as a going concern, following a marketing period, to a new entity set up by the directors.
We are delighted to have saved all 73 jobs and to have kept all 21 shops open by acting decisively with the directors of the new entity to secure the future of the company’s business.”
