Electus Wines Ltd – rises from the ashes of Vinance plc.... or does it?

It was nearly two weeks ago that a comment from an anonymous source alerted me to the existence of Simon Ford's Electus Wines Ltd:

'Jim, after the Vinance debacle am stupefied to see that Simon Ford has set up a new wine investment firm.'

Following Vinance plc's collapse into liquidation on 17th May 2013, Electus Wines Ltd was set up on 16th July 2013. It has two directors 37-year-old Simon John Ford, based in Ottawa, Canada and 69-year-old Timothy Graham Ford (Simon's father) based in London SE3. Electus Wines Ltd is registered c/o Lester Aldridge LLP, WSP House, 70 Chancery Lane, London WC2A 1AF. Timothy Ford is a consultant to Lester Aldridge LLP and is the Chairman - Reading University Pension Fund. See his Linkedin profile.

Electus Wines Ltd gives 33 St. James’s Square. London SW1Y 4JS as their UK contact address. This is a serviced/virtual office building. Electus' website was registered on 23.7.2013 at 33 St.James's Square.  

Simon Ford's Electus Wines Ltd does not lack ambition: '…a staging post for the finest wines from the world’s greatest terroirs, and a good friend to customers seeking exceptional value and quality wines that “wow”!' 

(I fancy a few of Vinance plc's creditors have thought "wow" what happened to my pension pot!)  

From the Electus Wines Ltd website

Simon goes on to boast:

'In 2002 Simon founded what became the UK’s largest specialist wine investment company...'  No mention that this company was Morgan Aston Ford that later became Vinance plc, which went bust in May 2013.  

An update (23.10.14) on Vinance plc from Chris Herron, Joint Liquidator at Herron Fisher.

 

'As regards general progress, Vinance PLC went from Administration to Liquidation on 17 May 2013.  This is normal where there is money to pay to creditors and the liquidation facilitates that distribution.  We have paid creditors 15p in the pound so far and expect to pay a second, smaller distribution in the new year.  The total creditor figure is approximately £15M.

 

Completely separately from this, we have returned perhaps £20M worth of wine to investors, having followed the audit trail and established that they owned it rather than the company. We remain puzzled as to why other insolvency practitioners appear not to have always taken this approach in other cases, where they have sometimes simply sold all the wine, even that owned by third parties, to put “in the pot.”'

The liquidators are required to report to The Insolvency Service on the conduct of directors of bankrupt companies. It would not be surprising if Herron Fisher's report on the directors of Vinance plc is not entirely complementary. The Insolvency Service can then decide to take action to disqualify someone from being a director. 

In February 2013 two of Vinance plc's directors – 59-year-old Simon Earl and 52-year-old Michael Wallen – were sent to prison for their part in running a brothel called Freddy's. Earl got two years and Wallen two years and five months. Details here and here.  

Yesterday I emailed Simon Ford some questions about Electus and am grateful for his rapid response:    

a) On the Electus website Lillian Kawasa is described as 'Director and Special Events Organiser'. However, she is not listed as a director at Companies House and appears to not to be a director of any UK company. Why then is she described as a 'director'.  

SF: Lillian Kawesa is a director of our Canadian company, as am I. 

b) There are two directors of Electus – yourself and and your father – Timothy Graham Ford. Why is your father not mentioned on your website? After all he has had a highly distinguished career both in law and outside – hospitals and Reading University.

SF: As you correctly say, my father Timothy Ford has enjoyed a long and distinguished career in the law and continues to enjoy one in public service; we couldn’t see the relevance of this to our wine buying audience.

c) 'In 2002 Simon founded what became the UK's largest largest specialist wine investment company...' Why no mention here of Vinance PLC, which went bust on 17th May 2013 with debts of around £15 million. To date your creditors have received 15p in the £ and can expect a smaller distribution early in 2015.

SF: 'Our principal business is that of a wine merchant to customers in Africa, North America, and Asia. Vinance’s business has no relevance to this.'

d) Will you be running Electus from Ottawa?

SF: 'I shall be running Electus from Ottawa.'

e) You and the other directors of Vinance were severely criticised by the Herron Fisher, the administrators (later liquidators), in their report of 17th December 2012 (investdrinks):

From the report: ‘We have asked the directors to prepare a summary of the company's estimated financial position as at 16 November 2012, which is known as a statement of affairs, but they have not yet prepared it. We understand that the reason for the delay is that there is too much uncertainty about the company's financial position and in particular the wine for which clients have paid.’

‘It was apparent that the company's records were inadequate and that the position of each individual client was not recorded properly.  The directors could not easily work out which clients were short of wine they had ordered and paid for or what the extent of the shortfall was.  The clients themselves were unaware that there was any problem, although many of them thought (and stated) that the company's systems left something to be desired.’

What measures have you put in place to ensure that Electus Wines Ltd is not Vinance plc Mark 2 please? 

SF: 'Electus and Vinance are two quite unrelated businesses. I will be putting my business experience at Electus’s service and we will will not be managing clients’ cellars.

You may be interested to note that we are only offering our cellar advisory service, where we help our customers source rare wines and spirits, because we have been invited to do so by individuals with first hand experience of Vinance who came to us, not by us seeking them. Indeed I haven’t approached anyone to buy wine from us, and nor do I intend to. Our customers have found us with no encouragement at all.'

Simon Ford explains that Electus' principal business will be with customers in Africa, North America, and Asia, so they allegedly would not be interested in the fate of Vinance plc. He may be right. However, if it is relevant that Simon Ford founded a wine investment company in 2002, then it is equally relevant that it went bust in 2013 to the tune of £15 million.

SF: 'my business experience at Electus’s service' – given Vinance's record keeping and the £15 million bust this may not be good news for customers of Electus....

SF: 'I shall be running Electus from Ottawa.'
There is nothing on the Electus Wines website (as of 7th November 2014) to indicate that the company is being run from Canada – no Canadian contact details or company number. Indeed it gives the impression that the company is run from London and is UK based:

'Three years in the making, Electus Wines was formed in London in 2013'. Electus Wines Ltd is a UK registered company and its contact details – telephone and address – both are for Central London. I asked Simon Ford whether there was a separate Canadian website but so far have received no reply.    

I understand that Simon Ford may soon be offering brass necks as an investment.... 

Update: 8th November 2014

A response received today from Simon Ford following me asking whether they have a Canadian website:

Dear Jim,

You're most welcome.

I have not completed the process of assembling the business in Canada for our Canadian company and am completing new site content including addresses etc and I'll let you know when it's finished if you like?

I’m very keen to bring a fresh approach with our cellar advisory service. It will be a new business model never before seen in the marketplace. As I said in my last email we're not managing customers' cellars, rather we intend to market our knowledge, experience and know-how regarding identifying value which we have learned over the last decade at work in the market and which has proven hugely successful as well with 5 year average price growth of 130%. As your recent posts on the Premier Cru / Cult Wine story show, even the longest established wine managers aren't immune to problems bound up in these managed business models and it may be the case that we're coming to the end of an era. We may be seeing the last days of these Aston Lovell type front and back end commission outfits, perhaps even of wine funds with their performance fees and management fees, and, who knows, maybe even of merchants and their margins as well? In the wake of Premier Cru's collapse there is certainly much to ponder for us all. We will certainly avoid repeating oft-made mistakes with our cellar advisory service approach and bring real evolution to the market. You will appreciate I am constrained by commercial confidentiality presently, but once we start accepting customers it would be great to think that you might be able to help us reach wine investors who look to you for guidance with news of our new business model because it will be of real interest to them. I think you'll be very interested in our novel approach too. I shall keep you informed of developments at any rate if you wish? There is much still ponder but when it is completed our new model will represent true evolution and real value for customers. For example, Simon Staples of Berry's has predicted major bidding wars for first growths in the coming decades - he's even gone on record stating Lafite 2005 may be changing hands at £10 million a case by 2058 - do you think this might happen? How do you see the market developing? And will investors be trading Chinese and Indian fine wines on Cavex in a few years do you think?  

I'm very much enjoying the move to the merchant side of the market; much more interesting and enjoyable. Please let me know if you can recommend some entry-level Loire wines for our African and Chinese customers. So far we've been focussing on the S.W. France of course, as pricing there is most suitable for our customers' purposes. We’re always looking for more great examples of French terrors and you obviously know a thing or two about the Loire region. Let me know if you’d like to help us?

All good wishes,

Cordialement,

Simon Ford
Director
Electus Wines Limited
33 St James's Square
London SW1Y 4JS
Tel +44 (0) 20 7129 1265
Mob +1 613 301 7776
Email simon.ford@electuswines.com
Web www.electuswines.com

 

Vinance plc: 'criminal disregard' for investors' money

Château Léoville-Barton 

The four directors – Paul Timothy Hayward Ford, Simon John Ford, Michael Alexander Wallen and Simon Antony Earl – of failed wine investment company, Vinance plc, ought to be acutely uncomfortable reading the administrators’ report released by Herron Fisher on 17th  December 2012. It is clear from the report that the company records were both ‘inadequate’ and ‘incomplete’.  So poor were records that it has not yet been possible to establish exactly how much is owed to investors. 
 

Herron Fisher estimates that some £5 million worth of wine is owed to Vinance’s clients, which totaled some 1300.  It is still not known how many of these are creditors. The company did buy wine, quite often from its clients. ‘Often, the company would itself buy wine from clients with a view to selling it to other clients. In this way, it accumulated a large quantity of stock which belonged to the company itself.’ This stock is estimated to be worth around £3 million. Herron Fisher is reluctant to sell this wine until the true position vis à vis the investors and their wine is known.

The report indicates that the directors were criminally negligent with their client’s investments, especially as it is highly likely that clients sold other investments/savings in order to buy wines that they were not allocated or in some cases not immediately bought. I use ‘criminally negligent’ is a broad not legal sense here. The directors promoted Vinance plc as an investment company able to offer its clients’ good returns on their wine purchased from them. Yet they cared so little about their investors’ financial health that they failed to put in place proper records. 

The investors were treated with scandalous disregard: it is high likely that although creditors will get some money back from the substantial stock of wine held by Vinance their retirement will be less comfortable than they hoped. 

From the report: ‘We have asked the directors to prepare a summary of the company's estimated financial position as at 16 November 2012, which is known as a statement of affairs, but they have not yet prepared it.   We understand that the reason for the delay is that there is too much uncertainty about the company's financial position and in particular the wine for which clients have paid.’

‘It was apparent that the company's records were inadequate and that the position of each individual client was not recorded properly.  The directors could not easily work out which clients were short of wine they had ordered and paid for or what the extent of the shortfall was.  The clients themselves were unaware that there was any problem, although many of them thought (and stated) that the company's systems left something to be desired.’

Furthermore the directors of Vinance sometimes used its investors’ funds to cover running expenses rather than purchasing wine. ‘It transpires that sometimes the company took money from clients but did not buy the wine immediately and the money was used for general overheads.  In a rising market the company had enough liquidity to repay clients if necessary, or to buy wine for them at short notice, and so customers did not suffer.  However, as the wine market began to fall the company ran out of cash and clients suffered a deterioration in service.’

‘The situation became very serious and the directors lent money to the company to keep it afloat as they believed in its viability going forward.  Ultimately, pressure from clients and HM Revenue & Customs forced the company to a crisis.'

The only audited accounts (to June 2010) for Vinance plc showed that the company managed to make a loss of £3.43 million on a turnover of £4.77 million. Given that the directors did not know the true financial position of the company, one has to wonder whether Vinance plc traded as insolvent for some time before it went into administration on 16th November 2012. 

In late November Herron Fisher sold Vinance’s customer list sold for £30,000 + Vat to Albany Vintners Ltd/Arc Reserves Ltd. Herron Fisher were contacted by 24 interested parties and received four bids. See post here.

It won’t be known what dividend will be payable to creditors until Herron Fisher have managed to sort out the mess and have then been able to sell Vinance’s wine stock.  

It is unclear whether Morgan Aston Ford Ltd, the previous incarnation of Vinance plc, kept adequate records. As Vinance plc would have inherited MAF’s records it would seem reasonable to think that they may well also have been inadequate and incomplete.

Unfortunately the failure by ‘wine investment companies’ to keep proper records is not restricted to Vinance. For example this was the same for Bordeaux UK, which went bust in November 2011.  

Vinance plc in administration

Vinance PLC, which started life as Morgan Aston Ford, was put into administration on Friday 16th November. It is not known what the deficiency is at the moment. Insolvency practioners, Herron Fisher, have been appointed as administrators. 

Those investors who have their wine is their own private accounts should not be affected. However, those who are waiting to have their wine allocated, purchased or are awaiting en primeur wines will not be so lucky. They will be unsecured creditors.  

In echoes of Bordeaux UK's collapse last year Herron Fisher note that: 'Unfortunately the company records are not perfect and it will take some time for us to establish the exact position.'  

Morgan Aston Ford was set up on 7th January 2002 and was dissolved on 15th June 2010. Vinance plc was founded on 11th August 2008 and took over from Morgan Aston Ford.  

  

Press release here:

'Herron Fisher, insolvency practitioners, have been appointed administrators of Vinance Plc a well-known wine portfolio manager / broker.

Based in Greenwich, London, Vinance Plc manages more than GBP £50 million worth of fine wine assets for thousands of investor clients in nine countries.

Herron Fisher have now taken over the day-to-day control and management of the company, which was put into administration in the High Court on Friday 16 November 2012.

Herron Fisher will aim to rescue the company as a going concern, or failing that achieve a better result for the company’s creditors as a whole than would be likely if the company was simply wound up (liquidated).

Nicky Fisher of Herron Fisher said, “We will perform our functions in the interest of the company’s creditors as a whole.  We understand that many clients will be unaffected as all of their wine has been allocated to them and is either held in bonded warehouses or they already have control of it themselves. There will unfortunately be some investors who have not been allocated all of their wines and there are no wines awaiting allocation, nor are we able to buy any more wine.  Unfortunately the company records are not perfect and it will take some time for us to establish the exact position.

“In the meantime, we will endeavour to find a buyer for the business.”

The administrators are hopeful that creditors will ultimately be repaid approximately 50% of their debt; however, this will take some time.

Herron Fisher, led by Chris Herron and Nicky Fisher, is an expert corporate recovery and insolvency firm. Between them they have managed the insolvencies of Meccano Toys Ltd and one of the largest illegal banks ever wound up by the Bank of England, as well as online gift retailers The Gift Registry Ltd and Wedding List Direct Ltd.

For more information visit: www.herronfisher.co.uk or e-mail
vinance@herronfisher.co.uk'