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Anthony Worrall Thompson latest on-trade casualty

Published:  20 February, 2009

Wine merchants and producers are facing a year of spiralling bad debt as increasing numbers of restaurants go bust, leaving them with unpaid bills.

Wine merchants and producers are facing a year of spiralling bad debt as increasing numbers of restaurants go bust, leaving them with unpaid bills.

The warning comes after another high-profile chef, Anthony Worrall Thompson, put his six restaurants into administration, owing staff wages and his drinks supplier Smart Wines thousands of pounds.

Solicitor Andrew Park, of wine trade practice APP Law, said unpaid supply bills could prove "fatal" to both distributors and winemakers. "The risk of customers going bump holding wine that's not been paid for is a real problem for suppliers in the current economic climatem and will become more so as the recession deepens," he said.

Worrall Thompson - who blamed the banks for not extending his loan without personal guarantees - immediately bought back two of the restaurants and shop under a new company name. In a similar way to chef Tom Aikens, who re-opened with new backers, it means any bad debts are dealt with as part of the bankrupt company and suppliers are unlikely to get paid back more than a few pence in the pound.

Patrick Rosin, of Smart Wines, said he had been lucky as the debt he was owed by Worrall-Thompson had been "resolved" and he would carry on supplying his remaining restaurants.

"I've actually been fortunate in this case", he said. "Part of the general problem is wine suppliers are seen as being easily replaced, unlike say Tom Aiken's butcher. There's actually very little you can do to protect yourself, which is why I am changing my focus more to retail now to get the money upfront. Also, I'm only going to deal with old-fashioned, established restaurants - not hip places that are here today, gone tomorrow."

George Muller, general manager of the closed AWT restaurant Notting Grill in London, told Harpers Wine & Spirit staff were told they no longer had a job on the day their wages were due to be paid. "We are owed five weeks," he said. "The way we have been treated is disgusting. Now I'm looking for another job in the restaurant trade - it's all I've done since the 1970s."

Worrall-Thompson was unavailable for comment, but told newspapers he felt "very let down" by the banks and pledged staff would get outstanding wages.

How can you protect yourself from bad debt?

- Ask for payment upfront
- Ask for security against customer's assets or personal guarantees
- Ensure your supply contracts include a retention of title (ROT) clause. This means any stock that has not been paid for must be returned if the customer goes bust.

APP Law

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