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Conviviality to file for administration after failing to raise emergency funds

Published:  29 March, 2018

Conviviality has confirmed the board has resolved to file notice of intention to appoint administrators following discussions with its lending banks.

In a statement released this morning, the beleaguered business stated it would appoint administrators within 10 business days "unless circumstances change”.

In addition the statement said: "The secured creditors can, however, appoint administrators without the requirement for notice.

"The directors intend to allow the business to continue to trade and the company continues to work alongside advisers in order to preserve as much value as possible for all stakeholders as it explores a number of inbound enquiries regarding a potential sale of all or parts of the business."

The statement from Conviviality follows yesterday’s announcement that Conviviality had failed to raise the £125 million needed to recapitalise the business following a tumultuous month which saw three profit warnings, its market value tumble, shares suspended and the departure of CEO Diana Hunter.

In addition, it stated that shareholders would likely receive “little-to-nil” value.

Conviviality had needed to raise £125 million, and fast, with financial and accounting errors being revealed over recent weeks, including an “arithmetic error” of some £5.4 million, soon to be compounded by an unforeseen £30 million tax bill.

Some £300 million was wiped off the value of the company before trading of shares on AIM was halted.

CEO Diana Hunter resigned on 19 March, a day after the Financial Times jibed in a headline “maths tutor needed” before Conviviality continued to trade, as the company scrambled to pull a rescue package together.

The fall of Conviviality, which counts leading UK wholesalers Matthew Clark and Bibendum, plus high street retail estates such as Bargain Booze and Wine Rack among its many facets, will undoubtedly have a major impact on the UK trade, including many suppliers that will have been hit by unpaid invoices and the challenge of routes to market.

Thousands of jobs also hang in the balance, with franchisees and employees across the company now having to wait out what could be an extended period of uncertainty as buyers are sought for various arms of the business.