Borough Wines bought out of administration
Borough Wines has been bought out of administration in a pre-pack sale worth £58,760 after widening losses caused it to collapse on May 31.
Muriel Chatel founded the business when she began selling wine from a market stall in the heart of London’s Borough Market back in 2002. The empire eventually expanded to nine stores selling beer, wine and spirits, while it built up a burgeoning wholesale business.
However, the retail estate began to suffer declining turnover and widening losses, and it was forced to close six of the sites after a proposed franchise scheme failed to materialise.
Borough Wines & Beers Ltd owned two subsidiaries – Borough Wines Retail Ltd and Expression Du Terroir Ltd – and in the year to August 31, 2017, net loss for the total business was £659,000.
In December 2018, director Corinna Pyke – who held a 16.87% share of the business – resigned following three-and-a-half years in the role. In January 2019, Arthur De Chalus was appointed director. Chatel held a 46.87% share of the business.
Borough Wines & Beers was being propped up by equity injections and shareholder loans, primarily from Chalus, Chegaray & Cie. That Le Havre-based family firm was founded in 1890, and De Chalus serves as its chief financial officer.
Trading losses placed Borough Wines & Beers at risk of a winding up order, and these losses were expected to widen as the stores were no longer having a positive financial contribution to the group. It was decided that Borough Wines & Beers could not be returned to a profitable position after so many stores had closed, so the directors concluded that the business should enter administration.
Mazars LLP was appointed to handle the administration process in May, with debts close to £1.3 million. Subsidiary Expression du Terroir was the largest creditor, owed £779,150.
Abbots & Delaunay, Amit, Beavertown, Big Drop, Bolney Wine Estates, Boutinot, Cellar Trends, Chase Distillery, Cotwolds Distillery, Hill Prospect, Reduchurch Brewery, Sipsmith, The Kernel and Toast Ale were among the recognisable trade creditors, but each was owed less than £10,000.
The administrators decided that by completing a pre-pack sale they could realise around 85% of trade creditors, which would not be possible if the business was liquidated.
The business was sold to a holding company called Spirits of Borough Ltd, which was set up in February 2019. De Chalus is a director of that company, and it is understood that Chatel will be involved in the management of Spirits of Borough Ltd.
It paid an initial consideration of £33,000 to buy the business out of administration, with a further £25,760 due by December 31, 2019.
The new company has taken on the remaining employees of Borough Wines & Beers and it is expected to negotiate and settle any claims directly with suppliers.
It has agreed a short-term lease on the Stoke Newington site and the Borough Wines site now details four stores within the group: Borough Market, Hackney, Kensall Rise and Stoke Newington.
It continues to wholesale to the trade, supplying high quality wine in kegs to restaurants, bars and venues, with an in–house cellar tech team providing expert installation services and ongoing support.