Insolvency Issues Hit Wine Industry Hard

Insolvency Issues Hit Wine Industry Hard

The wine industry has been subjected to a series of difficult days in the past week, after prominent trading organisations En Primeur Ltd, Canary Wharf Vintners Ltd and Encarta Fine Wines all fell into liquidation and the director of Vintage International Limited, Ofosujeme Ofori-Duah, was disqualified for nine years after being found guilty of wrongful trading.

The news represents the latest disclosure of decline surrounding the wine industry, after a tough few years which has seen Europe’s previous dominance over the trade slowly wane and the number of bottle purchases decline in both the UK and on the continent.

The recent turbulence in the trade begun last week with Canary Wharf Vintners Ltd, who had no choice but to enter into liquidation after it materialised that they owed their creditors a sizeable £250,000 – a sum that the company confirmed that it would be unable to repay even partially.

The companies director, Enver Deen, declined to comment when asked what happened to the businesses finances and failed to provide any of his firms investors with assurances of compensation, instead choosing to emphasise “transparency and understanding” as part of the core values of the company.

The negative prognosis of the industry continued just days later after it was revealed that another established name in the trade, En Primeur Ltd, had also passed into company liquidation

According to official disclosures, the firm was suffering from creditor debts totalling a substantial £1.8 million by the time it was liquidated, and was forced to pursue the company insolvency measure after it emerged that it had just £117,000 left in assets to contribute towards the repayment of its debt.

The company’s director, Marco Correia of West Sussex, also refused to comment on the current financial condition of his business, though he did confirm that Nedim Ailyan had been appointed the role of liquidator.

Mr Ailyan said: “At the present moment there’s no valid explanation for the deficiency and creditors have requested a full investigation by the liquidator.”

The hat-trick of demises was completed just days ago after Encarta Fine Wines of Kent – a prominent wine firm which once advertised employment vacancies for ‘broker positions’ paying £100,000 – fell into liquidation.

However, despite the plight of three of the UK’s established names in the wine industry, it is the disqualification of director Ofori-Duah which has captured the most headlines in the past few days.

Million pound man

The decision to disqualify Ofori-Duah from working in a director capacity for nine years from 30th July 2014 was made by the Insolvency Service’s Company Investigations Team after it conducted a meticulous investigation into his conduct during the final trading days of his company, Vintage International Limited.

Vintage voluntarily placed itself into liquidation back in October 2012 after amassing customer debts of £1,063,424 due to unfulfilled casement orders. At the time of liquidation, the total value of the businesses assets was estimated to be £21,789, with the overall shortfall when taking into consideration other trading partners and creditors believed to be £1,121,546.

Discussing Ofori-Duah’s ban, Mark Bruce, a Chief Investigator at The Insolvency Service said:

“The director in Vintage failed to ensure proper corporate governance was in place to clearly monitor client orders and the financial position of the company.

“The Insolvency Service will always look to remove from the business community those directors who act below the standards that should be expected of them given the circumstances of their company’s trading.”

In its investigation into the activity of Mr Ofori-Duah, the Insolvency Service concluded that on the date 30th June 2011, Vintage had amassed debt to its customers owing £293,056, of which over 50% had been acquired through unfulfilled orders made in the preceding 6 months. This was despite the fact that Vintage had been battling with insolvency issues during this period, and was fully aware that it did not have enough monetary reserves to afford to purchase a sufficient amount of stock to meet customer demand.

The Insolvency Service also highlighted that even after it the company became insolvent, Mr Ofori-Duah continued to authorise Vintage taking on new customer orders between the1st of July 2011 and October 2012, the month of its liquidation, totalling £917,410. At the time of liquidation, it was revealed that just £148,917 of these orders had actually been catered for.

The Insolvency Service concluded that Ofori-Duah’s ban was a fair reflection of the amount of money he cost consumers, though they did conceded that he did have little experience working as a director and didn’t have the usual qualifications expected of a person employed in this role.