Haribo Among Companies Owed Money by Wiggle After it Entered Administration
New documents released by the administrators in charge of Wiggle reveal large debts owed across the cycling industry and beyond including £20,000 to Haribo.
The latest update from the troubles at Wiggle details the company's financial situation from the time it entered administration in October last year. The 51-page statement of Administrator's proposal goes in-depth into the state of Wiggle as it entered administration with a complete list of creditors owed money.
Currently, the administrators in charge of the process have received 89 retention of title submissions and as of December 20, 85 agreements have been reached with creditors. Retention of title agreements ensures that if payments can't be made for goods received then the creditor/supplier can potentially recover the goods or when the administrators sell stock the proceeds can be shared amongst those owed money. While only 85 retention of tile agreements have been reached there are significantly more entities listed in the document. In a report by road.cc it mentions the list in the document may be outdated as it understands some of the debts have already been settled or are now lower than recorded.
Looking closer at the long list in the Administrator's proposal document there is a wide range of creditors from big distributors to sponsored riders, videographers and even Haribo. While Haribo is potentially owed a total of £20,275.20 there are some significant sums in the list with multiple entities waiting on payment of over £1 million. Some of the highest debts at the time the company entered administration in mid-October include:
- Axman Enterprise Co. £1,615,690.12
- Internetstores GmbH £1,302,143.50
- Ideal Bike Corporation £1,291,050.58
- Madison £1,095,272.90
- Extra UK £925,614.77
In brighter news, the future sale of the company continues to look positive as following an update on the sale process at the start of December the Administrator's proposal compiled on December 20 reveals several entities are looking into buying the business. The latest document states 24 Non-Disclosure Agreements were signed by potential purchasers wanting to look into the company with seven progressing to meeting the management team.
Funded offers were to be submitted by December 4, although no details are provided as the report states: "Given the sale process is ongoing, it is not appropriate to provide further details at this stage and all creditors will be updated in our first progress report."
Hopefully, with multiple parties interested in the company, we may have better news coming from Wiggle in the coming months.
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www.forbes.com/sites/carltonreid/2024/01/06/orange-mountain-bikes-to-appoint-administrator
In practical terms, that "loan" never existed. Those 1.3 million are most likely revenue, disguised as an intra-group loan agreement, which can be tax deductible. In very simply terms, what's happening here is different companies of the same group shuffling around their money in an effort to disguise their profits and avoid paying taxes.
Nukeproof will be a separate entity owned by someone else (don’t know who yet).
If that happens, whoever buys NP would be essentially buying designs, branding and IP as the overseas manufacturer that has not been paid will hold the carbon moulds etc and there wont be any real stock left as its all been sold off to CRC - that or the new owner would need to buy NP and then clear millions of pounds of debt to receive essentially nothing but a continued relationship with old suppliers.
If nobody pays the nearly £3mil owed to the current manufacturers of Nukeproof's bikes, then that manufacturing company is not likely write the sum off and continue business with any new owner, is it?
So my point is, unless this is paid either now in administration or by the new owners the carbon moulds and production methods lie with the unpaid Taiwanese manufacturer.
They have sold off most of the stock so any new buyer will have to bring deep pockets to pay for historic debts that they will have nothing to show for.
Don't pay up and they wont supply you again and you will have to purchase new carbon mould tooling / get production going with new suppliers which will take a year at least.
Doesn't look good for NP and Vitus in my eyes in the short term at least.
If it goes south and overseas creditors are likely to get zero - any money left will go to preferential creditors such as the bank etc - not that there will be any stock left to liquidate in order to get any cash anyway as most of it has been sold at cost price to cover immediate operating costs.
You think the moulds / any other associated articles of production currently sitting in the Taiwanese manufacturers factory would be released by them back to a new owner if they have an unpaid debt of over a £1millon though? - That is absolutely not going to happen.
Either the debt is paid or hundreds of thousands of pounds of moulds are toast.
The administrators will pay in a preferential manner too, it would be interesting to see who has been paid since these documents and how much cash has been burned up paying wages etc, they also need to put money aside to cover tax and vat liabilities and pay their own huge bills.
That's called cutting off your nose to spite your face.
@tom666: There is an order of preference in which debts are paid though in administration - it will be used to pay suppliers and debtors but unsecured creditors are last in line - I have no idea how the administrators tier the unsecured creditors and how much they pay them and when.
The $1M of unpaid debt is what it is. They will either collect some of that through the bankruptcy process or not.
Taking a new order from the new owner is separate transaction that they will have to evaluate independent of that old debt.
I completely understand that taking an order from a 'new' owner would be a separate transaction but good luck convincing the manufacturer to wipe a million debt and continue trade as before, more likely is a repayment agreement of some kind would have to take place.
I think CRC Wiggle is most likely to fully close in its current form. I think that Halfords (Tredz), the owner of JD sports (who owns Leisure Lakes, Wheelbase etc) or Mike Ashley (Frasers Group/Evans) are the most likely buyers and I don't think any of those buyers would want the staff and the warehouse etc. All of them would just buy the domains and IP and pull Wiggle/CRC into their own businesses. Whether or not they will buy Vitus/Nukeproof or if they will go somewhere else is another matter. Somebody who buys those brands might be interested in the design/engineering staff also, but not necessarily. I think the most likely thing is that it will close fully in it's current form.
So yes regardless of whether it’s called ‘administration’ in the UK vs ‘chapter 11 bankruptcy’ in the US it’s essentially the same thing. CRC and Wiggle are in fact going ‘bankrupt’.
"A limited company cannot “go bankrupt”; instead, it enters liquidation. The most common insolvent liquidation is a Creditors Voluntary Liquidation (CVL), initiated by directors and members or shareholders. At the end of the process, the company ceases trading, is wound up and struck off the register at Companies House"
CRC is not Bankrupt nor is it in Liquidation - it is in Administration as it attempts to prevent this from happening.
Just because the word means something in the USA, doesn't mean it means the same thing in the country that invented the language you have butchered
The debts owed all relates to stock purchased or services used not yet paid due to credit terms or future payment agreements, the administrators aren't paying debts that CRC couldn't previously service, they are covering their usual business costs.
Unfortunately pal - you don't really understand the basics.
One small supplier said he is getting 10p in the £ on the money owed to him.
That’s completely relevant. Thats the most relevant thing in this whole conversation. It means the company itself is insolvent, which is why it went into administration as soon as the external funds were pulled.
And what is debt owed relating to stock purchases? Debt and equity are completely different things. When investors buy stock it’s not a loan, they buy ownership. Stockholders aren’t owed anything.
Companies often only survive using external funding, often in a group holding some companies are non profit making while some make huge profits funding the others.
Here’s one for you to think about - for a few years my personal Ltd company made an accounting loss but at the same time paid corporation tax, as an opposite for a few years we made an accounting profit but paid no tax.
If you don’t have any experience or it’s USA specific why argue?
No they don’t. That only happens in the early stages before a company may become profitable, or as a temporary measure. If for an extended period of time a company loses money and can’t pay its bills it goes bankrupt, just like wiggle/crc right now. If a certain subsidiary or business unit is not making money the parent company isn’t going to just keep funding it indefinitely.
And I’m not sure what book vs tax income has to do with this situation. Those types of differences can happen to all companies, profitable or not. They have nothing to do with a companies ability to pay it debts.
Think about what you have written - you just said running as a taxable loss has no nothing to do with paying debts but at the same time say a company making a loss goes bankrupt.
What on earth does ‘book v tax income’ mean - American bullshit doesn’t apply worldwide my man, you haven’t policed everything yet.
CRC can’t pay its suppliers. They can’t pay for the goods they are trying to sell. The business is failing. That’s why the parent company pulled the plug.
www.amazon.com/review/RZFIYJTPVUZ94
www.forbes.com/sites/carltonreid/2024/01/06/orange-mountain-bikes-to-appoint-administrator/?sh=5ab477404cd7&s=09
Revenue: €1.7–2.0 billion
Maybe next time the can address the real problem causing inflation (price gouging) instead of the fake problem (low interest rates).
When the money supply grew due to fed money printing, companies were able to charge more for their products as the average consumer had more cash to spend. Now that demand for bikes has fallen, savings rates are down, and interest rates are up, bike companies are discounting their bikes and the market is returning to equilibrium.
I understand the anger with inflation. I used the word “average” when describing the consumer and millions of people are below average. Anyone below average felt/is feeling a lot of economic pain.
Also nice to think about the hundreds of jobs lost too eh?