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Vulpine administration report from RSM

3 July 2017

Following the administration of Vulpine, the bike apparel business, it has been revealed that £250,000-worth of stock was bought for £70,000.  The report by the administrators RSM was sent to Vulpine’s 600 shareholders informing them that they will not receive any money back.  Some people might be surprised at the big difference in book value and what is actually sold for.  However it is inevitable that any new retailer will have to make all sorts of changes to their own stock arrangements in order to shift the goods.  Also they would need to move it all to their own warehouse at cost.  Finally of course the book value is often higher than the actual resale cost.

Mango Bikes eventually bought the assets on 23rd May for £70,000 (a revenue share scheme was also put in place).

Vulpine co-founder and MD Nick Hussey told BikeBiz: “I’m glad that Mango Bikes will continue the brand that I created. I'm helping them get to know Vulpine in depth. They're good people who care about the brand and its customers, and I hope their business thrives." 

Vulpine’s 600+ shareholders invested via crowdfunding on Crowdcube. One investor put in £50,000.

Hussey told the administrators that the goal for the company from the outset had been to “build the brand as fast as possible, with an exit by trade sale after 5 years.”

That sort of talk looks distinctly at odds with how most successful entrepreneurs work.  The phrase “fast buck” comes to mind.  The desire to actually make a profit by providing cyclists something they want to wear seems to have not featured.  Therefore it is not surprising really that the business failed.  Costs were too high and a cash hole appeared as it became clear that they were not going to be able to get stock in for the summer season and hoped that raising more money was the answer.

Shareholders were not informed of the company’s perilous cashflow problems because, said Hussey, “contacting nearly 600 investors would be essentially making the news public and this would have had a negative effect on potential investor and customer confidence and would have been too great a distraction from raising funds on a positive platform.”

(Had the shareholders been told their investments were at risk it’s possible they might have been able to take action before losing every penny.)

He told BikeBiz: "It’s a difficult time, but high-growth businesses have higher risks, and you have to go into that as an entrepreneur with your eyes open. Though there was overwhelming support and sympathy from shareholders, I was not surprised to receive criticism from some stakeholders. That is the nature of a managing director’s responsibility.

He added:

“I’m devastated that we failed and that people I care about were affected, but I know that everyone tried their best. The sensationalist conclusions made by a few on the internet were disappointing when I knew we'd done the right thing, morally and professionally.”