This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Brands & Merch Business News Legal
Awesome Merchandise founder comments on firm’s pre-pack administration
By Chris Cooke | Published on Wednesday 31 August 2022
The founder of Awesome Merchandise – the Leeds-based merch print and production firm that has many clients in the music industry – has updated people who invested in the business via crowdfunding platform Crowdcube after it was confirmed that the company has gone into administration.
Speculation that there were problems at the merchandise outfit had been building in recent weeks as complaints about issues with orders and refunds increased online. Obviously, in music, a significant part of the merchandise business is linked to live activity, which means demand for the services of companies like Awesome dipped during the COVID pandemic. And that seemingly created challenges for the company that were ultimately insurmountable.
That said, the core Awesome business will continue to operate thanks to a so called pre-pack administration, which is where the sale of an insolvent company’s assets is basically put in place before the administrators are formally appointed. When this approach is employed the buyer is often another entity controlled by the directors of the insolvent company, and that’s the case here, the buyer being Print.inc Group Limited, a new company set up by Awesome founder Luke Hodson.
Confirming that that deal had been done, one of the administrators appointed by Awesome Merchandise Ltd, Nick Holloway of Interpath Advisory, said: “We are pleased to have agreed this transaction which ensures continuity of service for Awesome Merchandise’s customers and importantly, safeguards a number of jobs”.
Meanwhile, his fellow administrator, Howard Smith, provided slightly more information, adding: “Awesome Merchandise is a bespoke business with strong B2B relationships across the music industry which, unfortunately, like many other companies, experienced significant financial challenges as a result of COVID-19. We’re delighted to have completed this transaction which secures the future of the business, as well as safeguarding the jobs of 94 employees working out of the head office in Leeds”.
Although the quick sale to Print.inc Group Limited should reduce the negative impact of the administration on employees and customers, that obviously doesn’t help the people who invested in the Awesome company via a Crowdcube campaign in 2018. As the merch firm was approaching its tenth birthday, it raised over £650,000 on the crowdfunding platform in order to fund expansion, especially in the US market via a base in Austin, Texas.
Because the Awesome company has gone into administration, those investors won’t get their money back or see any return. A spokesperson for Interpath confirmed to the Yorkshire Post: “Crowdcube funders as equity investors will not form part of the unsecured creditors”.
Hodson updated those investors in a post on the Crowdcube website late last week, stating: “It’s with a heavy heart that administrators have been appointed to Awesome Merchandise Ltd today. Awesome Merchandise Ltd had been greatly impacted by the pandemic, reduced market activity, internal and external factors”.
“During recent times”, he explained, “I have been quiet on Crowdcube because of directors duties, meaning my legal responsibilities shifted to a creditor focus, whilst trying to find a solution with a team of advisors. Unfortunately a solvent solution was not found despite months of efforts to refinance, find investment or sell the company”.
“Awesome Merchandise’s website, assets and IP have been purchased by Print.inc Group Ltd”, he added. “This will allow the factory to remain open and for customer orders to be fulfilled. The current work in progress has now been picked up under the new company and will be processed over the coming two to three weeks. Credits will be offered to customers that cancelled orders. 93 employees’ jobs have been saved and will transfer to Print.inc Group Ltd”.
“I am deeply sorry that I was not able to carry Awesome Merchandise Ltd and its investment from the Crowdcube community to a successful exit or return on investment”, he went on. “Many investors big and small are close friends and family. Many others are long term customers, partners and suppliers”.
“Awesome Merchandise Ltd has been the almost sole focus of my life for seventeen years”, he continued. “There are a lot of factors that contributed to the administration and a more detailed report will be made by the administrators”.
“Those of you that know me personally have a good idea of the circumstances and pressures that I have been working under for a prolonged period and that administration is something I have made every effort to avoid. I worked to find any solution other than this, due to the impact it will have on investors and creditors, but nothing else was forthcoming”.
“I am grateful to everyone that supported the Crowdcube [fundraising] and for the team that worked under difficult circumstances the last couple of years during the pandemic”, he concluded. “It gives me some comfort that the huge support we have received over the years will not result in a complete waste”.
Responding to criticism by some of the Crowdcube investors regarding the sale of Awesome’s assets to Hodson’s new company via the pre-pack administration, he subsequently wrote: “The funding for the new company came externally from family, after every other avenue had been exhausted”.
“I am extremely grateful that my family helped at the last minute”, he added, “to give a chance for me to continue working in an area I am passionate about and I believe I have helped benefit the UK print and creative markets on the whole. The belief my family has shown, ultimately has helped to save over 90 people’s jobs”.
He then stated: “Three weeks ago today I was in the position where I needed to liquidate the business completely. The deal that has been done had to go through a lot of diligence and external auditing, it met the requirements set out by law. This was the last type of deal or option left open”.
This story is discussed on this edition of our Setlist podcast.
