wine-searcher

Wine Name:
Vintage:

Saturday, 9 August 2014

Premier Cru: the questions Cult Wines Ltd declined to answer



This post covers questions sent to Cult Wines Ltd yesterday as well as a look at who has legal control over the wine portfolios held by Premier Cru Fine Wine Investments Ltd.


Questions to Cult Wines Ltd: 
Yesterday I sent request to Philip and Tom Gearing, the directors of Cult Wines Ltd, to answer some questions. As is their right, they declined to answer the questions at this time. Chris Mercer at Decanter magazine was later told that Cult Wines are bound by a confidentiality clause until 15th August. Unfortunately clients of Premier Cru have until 14th August to accept the proposal from Cult Wines Ltd ...

Questions I put to Philip and Tom Gearing of Cult Wines Ltd:
   
a) Cult Wines Ltd will be charging Premier Cru clients a 5% management fee for the first two years? Are there additional advantages to being with Cult Wines that have not been covered in the emails received by clients of Premier Cru?
b) Has Cult Wines Ltd paid Premier Cru for the right to handle clients portfolios? If so what was the sum involved and when was this agreement concluded?  If no money was involved when was the agreement made?
c) What is the name of the company that is handling the arrangements to put Premier Cru Fine Wine Investments Ltd into liquidation?
d) Do you have any indication how the liquidator will view the wine in Premier Cru clients' accounts?
e) In your email to investors (7.8.2014) you mention a shortfall in some of Premier Cru clients portfolios.
What is the value of this shortfall?
Is this shortfall down to en primeurs that have yet to be delivered or is there a shortfall in bottled wine that should be clients' portfolios? If this is the case do you know why wines are missing and how much is missing? To what value?
f) If there is bottled wine missing is it ethical for Cult Wines Ltd to be offering 2013 Bordeaux en primeur as a replacement?


•••


Further reflections and questions including who has legal control over the wines: 
One further question I could have asked is: what have you been told by Premier Cru about the 'shortfall' in clients' portfolios? What reasons for the shortfall have you been given? 

.. and another on the 5% management fee. What additional expenses to Cult Wines Ltd are involved in the transfer that justify imposing a management fee of 5% for the first two years that you admit is 'so high'? 

-          Why are the fees so high moving to Cult Wines?
Service Fees – In order to explain the rates being quoted for years 1 & 2, our 5% annual charge for years 1 & 2 are linked to a reducing liquidation fee so should you decide to exit on either year 1 or 2 the total cost will not exceed 10% which matches the current cost for liquidating your portfolio at the prevailing market rates
'a reducing liquidation fee' 

One well-placed observer has commented that the handover 'appears to be a shambles'.

It is not clear that Premier Cru Fine Wine Investment Ltd is actually going into liquidation or will just be wound up. The only mention of a liquidator in any correspondence I have seen is in the email sent from Cult Wines Ltd to Premier Cru clients sent on 8th August.  The letter from Premier Cru (31st July 2014) makes no mention of a liquidator. 
 

It is crucial to know who has currently legal control over the wines clients portfolios held in Premier Cru's umbrella account at EHD as whoever has control can release the wines to Premier Cru clients assuming that title was clear.  

From the Premier Cru letter (31st July 2014) appears that Premier Cru Fine Wine Investments Ltd still has legal control over their clients' wines stored at EHD as the agreement with Cult Wines Ltd is not due to be finalised until 14th August.


'We have therefore undertaken a review of our market competitors and have concluded that Cult Wines, who are currently the UKs leading fine wine investment company as the best positioned to assume management of your portfolio and on this basis we are finalising an agreement to migrate our private clients to Cult Wines (PCI) Limited which we hope to complete by August 14th 2014.' 

It is interesting that there is no mention of a liquidator here. Premier Cru Fine Wine Investments Ltd has legal control over the wines until 14th August 2014. After that date legal control will be with Cult Wines Ltd assuming that the agreement is finalised as envisaged.

Assuming that title to their wines can be established, then Premier Cru ought to be able to release wines up to 14th August to
their clients who do not want to accept Cult's proposal and want to make their own arrangements. From 14th August it would appear to be Cult Wines Ltd, who will be able to release wines.  

From Premier Cru to their clients (31st July 2014):
'To help us complete the transition to Cult Wines as quickly and as smoothly as possible, please confirm your agreement to the transfer of your account to Cult Wines by no later than August 14th 2014.  All you need to do is reply to this notice indicating that you would be content to transfer your account to Cult Wines.  If we do not receive any reply to this notice by August 14th 2014, we will assume that you do not object to this transfer.'


The inferred advice from Premier Cru to their clients
not wishing to accept Cult Wines Ltd's proposal is to contact them (Premier Cru) 'no later than August 14th 2014 declining Cult Wines Ltd's proposal and asking for their wines to be transferred to whatever arrangements individual clients are making. This notification may have to be done through Premier Cru's registered office.      
      
The address of Premier Cru (Fine Wine Investments) Ltd registered office is:
Barnes Roffe LLP 
3 Brook Business Centre 
Cowley Mill Road 
Uxbridge 
Middlesex UB8 2FX 

Links to other posts on Pass the portfolio. Here and here.





35 comments:

  1. This comment has been removed by a blog administrator.

    ReplyDelete
    Replies
    1. Edited comment from Anon:

      Premier Cru also seemed to have a merchant arm. Premier Cru trading? What happened to that?

      And why is somone here in HK still trying to sell their client list to various people...

      The other thing I find strange is if.you read past all the crap you will see that Cult are not confirmed buyers. They are testing the waters...1) it is appalling to try and charge a 5% fee when all the clients are down, upset or have simply lost money 2) replacing missing stock with Bordeaux 13 is criminal. Everyone has slammed the vintage. Clearly PC clients are being taken for a ride once again. HK wine merchant

      Delete
    2. Premier Cru Trading Ltd is now in liquidation. It went into liquidation in September 2014.

      Delete
  2. Thanks HK wine merchant. I agree the situation is very unsatisfactory and that Premier Cru has treated its clients very badly.

    What level of stock does Premier Cru have in its own account at EHD? if there is stock then surely this should be used to make up the shortfall in clients' portfolios rather them being palmed off with 2013 en primeur. If the shortfall is down to fraud rather than incompetence and mismanagement, Cult Wines' offer of 2013 en primeur to make up missing wines from vintages like 2009 in my view makes them an accessory to the fraud.

    If the 'shortfall' turns out to be substantial, then does Cult Wines Ltd have the financial strength to make up the missing wines with 2013 Bordeaux en primeur, accepting that this offer is highly unsatifactory? Its latest account do not look good.

    Premier Cru Trading Ltd is still an active company. Its last accounts to 30.4.2013 are for a dormant company. You are correct that Ian Elton-Wall, one of the directors, is setting up a new wine company – Renaissance Vintners Ltd.

    All of this is a very strong argument for people to open their own accounts at bonded warehouses rather than take the risk of a client reserve account with a wine company.



    ReplyDelete
    Replies
    1. This comment has been removed by the author.

      Delete
  3. This comment has been removed by a blog administrator.

    ReplyDelete
    Replies
    1. This comment has been removed by the author.

      Delete
    2. Jim I think HK WM has a point. However, you never seem to do a story on the liquidators. PC could hypothetically have one million pounds worth of stock but you and I know the liquidators will cream off a large chunk of that. Leaving the clients even more buggered than they were before. That too is criminal!!!

      PC seems like mis management galore and I'm struggling to get my head round why Cult want this bag of toxic waste.

      Surely the clients will suffer more : 5% fee 5% to exit means the clients lose an additional 10% / and here's the kicker. Mismanagement leads me to think that their filing and records system will be a disaster too. How will they know who has what.

      Liquidators bank on this as they can take higher fees.....


      Delete
    3. This comment has been removed by the author.

      Delete
    4. Edited comment:

      Thanks Geoff. I am aware that liquidators like lawyers make a profit from these situations. However, for the moment Premier Cru is not in liquidation.

      It is still not clear what the size of the 'shortfall' is. Gaining a significant number of clients with their portfolios with a 5% management fee is probably attractive to Cult providing it doesn't come with too much grief. Of course if the shortfall is large then it's probably a very different matter. Equally the record keeping as you suggest could be a mess.

      Delete
  4. This comment has been removed by a blog administrator.

    ReplyDelete
    Replies
    1. Hi Ian, can you please tell me if Premier Cru is still trading? I have a huge investment with them and I cant get hold of them or even get a reply to my emails. Their phone goes straight to voice mail for over a month now. What's going to happen to my investment & money? please, any reply will be hugely grateful. I would hate to think I have lost my investment which was to pay for an urgent operation in October 2014. Can you email pls? angieweston1@hotmal.co.uk

      Many thanks for any reply
      A.Weston

      Delete
    2. Angie. Although there seems to be no sign yet that Premier Cru is going into liquidation or applying to be dissolved, it appears clear that they are no longer trading. Did you receive the statement of your account sent out by Premier Cru at the end of July?

      Delete
  5. This comment has been removed by the author.

    ReplyDelete
  6. This comment has been removed by a blog administrator.

    ReplyDelete
    Replies
    1. This comment has been removed by the author.

      Delete
    2. This comment has been removed by the author.

      Delete
    3. This comment has been removed by a blog administrator.

      Delete
    4. Edited comment:

      As an Exit client of PC ,(we asked them to sell all our wines in March ),we understand that we have a shortfall of 23K .We have had absolutely no contact from PC and only gleaned this over the phone fron Cultwines office .We know nothing about fine wines ,they being advised as a good investment by our financial advisor.We are not wealthy but were using this to boost our pension into old age ,being both over 70 .

      Delete
  7. Anon. Very sorry to hear of your shortfall. 23k is the largest shortfall I know of so far.

    ReplyDelete
  8. Just spoken to Action Fraud, very helpful people.
    www.actionfarud.police.uk tel: 0300 123 2040
    Anyone wishing to report PC as I have just done please use ref: NFRC 140800743312
    I have been shortfalled by £11k and it is extremely depressing.

    ReplyDelete
    Replies
    1. I have just spoken to them too.Thank you for your information and telephone number . I have been offered replacement wines for our shortfall ,which is double the one above .but can`t see that Cult can make up that shortfall.

      Delete
  9. Anon. Sorry to hear about your shortfall. Have Cult Wine Ltd offered to make up the shortfall with 2013 en primeur Bordeaux? Would be very interested to know what wines are in your shortfall please? Do email me if you prefer. Many thanks. Jim

    ReplyDelete
  10. I also have been affected by this however, not by as much of a shortfall as some. I really feel for you guys.

    The way PC have handled this whole "winding-up" of the Company is so bad, is it actually legal? Isn't there anything in the Companies Act?

    Also I've been discovering that the valuation of most of my wines by Cult Wines seems to be "surprise" lower than PC's last valuation. Apparently prices have been supplied by Liv-Ex. Is it likely that they are correct and PC have been overvaluing my holding for some time?

    ReplyDelete
  11. Anon. Without knowing what valuations you were given and when by Premier Cru, it is impossible to know whether your portfolio was overvalued.

    ReplyDelete
  12. This ludicrous deal with Cult Wines appears to be nothing more than a thinly veiled attempt to get PC off the hook by essentially getting the clients themselves to pay for the shortfall through this 10% “management fee” over the first two years. Perhaps the average shortfall over the portfolios is – you guessed it – about 10%, and so Cult know they can cover the cost of making it good by charging this fee. What a marvellous wheeze – get the clients to pay for some of their wines twice.

    But why would anyone enter into an arrangement with the sort of company which has come up with this idea? If your shortfall is in the order of 10%, going it alone (it is not difficult and advice from friendly experts is freely available) and thereby avoiding the fee leaves you no worse off and is surely more appealing. Perhaps if your own portfolio has a shortfall of much more than 10% you might consider the Cult deal worthwhile. Or would you? Do you really want to hand control of your portfolio to yet another company with a perilously fragile financial base? And let’s look at the quality of their investment advice. It would seem their first piece of portfolio “management” will be to effectively replace good investment vintages with 2013 en primeurs. There is, after all, nothing stopping Cult from simply buying in the actual wines which are short, but they have stated they will not do so and will only insert 2013s. So they are actually making a deliberate switch out of say 2009s into 2103s and one has to question the motives for this. Who would tolerate such an arrangement and who would want to pay anything to a company who forced this upon them?

    ReplyDelete
    Replies
    1. Thanks Anon. I find it extremely difficult to disagree with you...

      Delete
  13. PC claim that they transferred £3,750 into my bank account in June. There is no record of this on my bank statement. Furthermore they are unable to provide details of my bank account to which they claim the money was transferred. I have tried contacting them but no joy. Needless to say I'll be passing on info. to the action fraud website .
    D. Hill

    ReplyDelete
  14. Hello Jim. Have there been any further developments to this story. The blog seems almost to have dried up. All the best

    ReplyDelete
    Replies
    1. Anon. Thanks. No recent news. According to Companies House Premier Cru remains an active company, although the latest accounts are still overdue.

      Am in France having ridden the whole of the Loire Valley to raise money for young people with cancer and am now followimng the 2014 vintage. Also it currently seems quieter on the dubious wine investment front.

      Delete
  15. Anon (message received yesterday): 'Hi Jim,
    Read this - it makes some comments above seem doubtful:' What makes some of the comments doubtful, please?

    ReplyDelete
  16. Why don't we all take a class action against the directors of PC and go after their personal assets as well?

    ReplyDelete
  17. Anon. I suspect that it all depends upon whether the cost of the action outweighs the return you might get.

    ReplyDelete
  18. Hi Jim

    Is there any update on this saga? Apparently, they are no longer winding/dissolving the company now, I hear it may be a tax thing.

    ReplyDelete
  19. Anon. I'm afraid I don't have any substantial update on this very sorry and shabby saga, which did nothing for the image of wine investment. I believe the majority of the clients went to Cult, while the rest made their own arrangements.

    ReplyDelete