If the liquidator is prepared to release these wines to investors, then Premier Cru clients will have various options: opening their own account at a bonded warehouse – EHD would be the most logical in this instance as the wines are currently stored there and their fine wine facilities are good. Alternatively, as an alternative to the Cult Wines Ltd, they could consider dealing with storage/management companies like Arc Reserves, Nexus or Private Reserves – see my previous post here. Clients wanting to sell would be in a position to approach a number of merchants to see who is offering the best deal. Though be warned the prices have been falling since 2011, so now is not an ideal time to sell.
There is a further option that Premier Cru clients may want to investigate – exchanging the value of their wines into shares in a wine fund. This possibility has been suggested to me by Miles Davis, a director of Wine Asset Managers (WAM). These funds are similar to a unit trust and as they are collective investment schemes their management is regulated by the Financial Conduct Authority (FCA). The FCA insists that certain criteria have to be met before someone is allowed to invest in one of these funds.
This means that there would be a minimum sum required – Davis has indicated for WAM this would be £10,000. Among other criteria a Premier Cru client would have to show that they are a 'sophistcated' investor and that they understood the nature of collective investment schemes. Naturally WAM or other funds would only be interested if they wanted your wines.
Clearly any investor considering transferring into a wine fund would want to do their own due diligence to establish whether this is a viable and attractive option for them.
Update (14.45 8.8.2014)
One Premier Cru client reports that in late May/early June 2014 £3000 worth of stock was moved out of his in-bond wine portfolio and sent to Asia without his knowledge and permission. It is not known whether this is an isolated incident or whether there is a large black hole in the wines that should in portfolios held by Premier Cru.
Date: 7 August 2014
As the client accounts are sub-accounts of the main Premier Cru umbrella account, it won’t be possible for you to have EHD release your wines without permission from Premier Cru. As PCI is moving into a liquidation it will then be the responsibility of the liquidator to make these arrangement for you.