East London Liquor Co has been sold as a going concern, after being placed into administration to avoid being unable to meet its debt obligations to HMRC.
Founder Alex Wolpert told The Grocer a pre-pack sale of the craft distillery to existing board members had been agreed and all nine of its staff would transfer over to the new company.
He confirmed, however, that around 1,500 investors from the brand’s two previous crowdfunding rounds in 2018 and 2021 – which raised a total of more than £2.2m – would see their ownership stakes eliminated.
Wolpert said HMRC had demanded East London Liquor Co pay nearly £200,000 it owed in VAT, duty, and employee NI contributions dating to the pandemic by the end of November.
“As with many businesses, we came out of Covid with debt to HMRC,” he said. “We had a time to pay agreement and every year we’ve renegotiated that. This year I was very upfront that we were in the process of raising capital and we needed a little bit more time.
“I didn’t think there would be such an unrelenting position from HMRC to hold me to a date and ask for a big lump sum from the overall debt pile.”
These “harsh new conditions”, which Wolpert claimed were demanded with “no assurances they [HMRC] wouldn’t then ask for the full balance” had left him with no choice but to put the company into administration or risk liquidation, he said.
He said the sale of East London Liquor Co’s assets and IP was not about “us dancing off into the sunset” but “maintaining jobs and being able to fulfil orders and continue with the accounts we have”.
“I’m really aware that optically buying a going concern out of administration with a new company has the potential to look bad,” he said. “There is and there was a real willingness to pay our debt. It wasn’t something that we were trying to dodge. We were just trying to negotiate viable terms.”
Wolpert said since placing East London Liquor Co into administration he had directly contacted investors to explain the situation.
“I’ve emailed everyone from the crowd and phoned anyone who I have got a number for in my phone,” he said. “We wanted to be as transparent as we possibly could be about the process.”
Wolpert is one of several shareholders in the new company. The others include Andreas Akerlund and Roland Grain, and pub, bar & restaurant group Barworks. All previously held equity in the East London Liquor Co business.
The new company has been established free from the debt owed to HMRC, but will take on an asset finance agreement with a third-party lender for distilling equipment.
East London Liquor Co’s spirits will continue to be available in supermarkets including Waitrose, Tesco and Ocado, as well as in the on-trade and 25 export markets.
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