Vertu considers a pre pack administration
30-Jun-2017Vertu is a luxury phone maker, previously owned by Nokia, with devices ranging from £7,500 to £16,400. Aimed at celebrities and the super rich these extravagant devices are made out of premium materials with exclusive features such as ring and alert tones, created by renowned composers and performed by the London Symphony Orchestra.
Although these features may be desirable to some, Vertu is failing to sell enough units in order to keep the business afloat, only managing to sell 9,000 units last year as opposed to the 57,000 it sold at its peak in 2007. This was further made apparent when the director, Jean-Charles Charki, gave a statement to the court that the company has become insolvent with debts of more than £128m.
The Turkish exile owner Murat Hakan Uzan, who took over the company in March, plans to put its manufacturing arm into administration to wipe out its heavy debts. He will attempt to secure approval from the court next week to transfer the assets from the existing company to a new company that is free of debt, although one of Vertu’s creditors, a technology recruiter by the name of WA consultants, has petitioned for the company to be “wound up”. Vertu AK, Mr Uzan’s French holding company has offered to buy VCL out of administration from the insolvency firm for £1.9m. Only around £350,000 would be recovered if VCL were to be liquidated.
According to the Telegraph 200 employees have not been paid this month and hundreds of thousands of pounds have gone missing from the company’s pension fund. Further to this, staff have been told by Mr Uzan’s representatives that they will not be paid till after the hearing, on the condition that a pre pack administration sale is approved by the court.
So what is happening?
As there has been a winding up petition the firm is seeking an administration via a court order. It is likely that any assets if they are to be transferred will have to be valued and the court will have to "validate" the moving of the assets. If money has gone missing from the pension fund then it is likely that the company could be wound up "in the public interest"