The owner of alcohol retail company Bargain Booze, Conviviality, has recently announced it will be entering administration. It’s yet another blow to the flailing UK high street and 2500 jobs are at immediate risk.
A seismic £30 million tax bill for shareholders has been unveiled by Conviviality. This happened after the company reduced its projected profits from £70 million to £55 million. The ripples of this collapse in particular will travel far. The business doesn’t only have stores nationwide, but it’s also plays a major part in supplying the UK’s drinks industry. Over 25,000 pubs and restaurants across the country rely on Conviviality’s brands including Bargain Booze but also Wine Rack and Bibendum. The announcement will no doubt cause worry and panic for a number of companies of all shapes and sizes.
CEO Diana Hunter admitted defeat by stepping down in late March after 5 years at the company’s helm. During her time at the top she oversaw a number of acquisitions including Wine Rack, Matthew Clark and higher end Bibendum. Conviviality was forced to ask for £125 million from investors after admitting to the large tax bill. The funds weren’t offered. The company stated that “Despite a significant number of meetings with potential investors resulting in good levels of demand, and constructive discussions with a number of key customers and suppliers regarding the provision of support, there was ultimately insufficient demand to raise the full £125 million.” A common story that runs through most of the high profile collapses we’ve analysed.
With such a vast remit, thousands of businesses will be left reeling. Conviviality supplies all the wine and spirits to 900 Wetherspoon pubs for example – a contract worth tens of millions of pounds a year. However Wetherspoons have already announced that for the time being deliveries are continuing, and it also has contingency plans if supplies are disrupted.
Whilst Conviviality has a contractual payment window of 120 days, the firm declared recently that on average it takes them 56 days to make payments. However given current circumstances, there will be inevitable delays and late payments. Let’s hope that the majority of partners are protected by invoice insurance, and won’t be left out of pocket due to this large-scale client insolvency.
The Conviviality collapse only adds fuel to an already-raging fire for smaller, yet ambitious, businesses. The Federation of Small Businesses (FSB) have been persistent with the need for late payments to be a major government priority in 2018. The Chairman of the FSB, Mike Cherry, said “FSB research demonstrates that a third of payments to small businesses are late with many turning to personal credit cards and overdrafts just to survive”. Many business owners will now have to turn to these measures due to another British high street loss. But if they had invoice insurance with our team at InvoiceInsure, our network of underwriters would be the ones embarking on debt collection. This would save time and money for smaller businesses needing to quickly respond to the loss of this drinks giant.
2018 hasn’t been kind to the UK high street so far. Since January, Toys R Us and Maplin have filed for administration, while fashion retailers including New Look and Select are rolling out radical store closure processes. Dining is also under fire. Jamie’s Italian, Byron Burgers and Prezzo are all shutting restaurants and culling hundreds of jobs.
Make sure that your business plays safe in increasingly turbulent business times by insuring invoices against client insolvency and protracted default. Don’t lose out on money you are owed.
We’d be delighted if you get an invoice insurance quote for by clicking the link below – it’s a simple process and won’t take long.