Wedding gift company Wrapit has lost its fight to find an investor and gone into administration.
KPMG Restructuring, at which Jane Moriarty and Myles Halley have been appointed joint administrators, said that the company had “been struggling for some time and recently encountered severe financial difficulties”.
Moriarty said: “Despite the directors’ best efforts to secure a rescue deal, they were left with no alternative but to cease trading the business with immediate effect and to put it into administration. We are seeking a buyer for the business and its assets, albeit for a limited period.”
Wrapit, which has made losses for several years, has laid the blame for its failure firmly at the door of its bank, HSBC, saying that it has blocked credit card payments and withheld £1m of Wrapit’s funds.
Co-founder Pepita Diamand claims that “suppliers will go unpaid”.
In an email sent to customers yesterday, managing director Peter Gelardi said:
“Since HSBC’s decision in May to retain our credit and Visa debit card income, we have fought hard to keep Wrapit in business and find a white knight to provide the necessary funds to enable the company to continue trading and implement its growth strategy.
“There have been several contenders but each one has fallen away in the face of the failure of HSBC to cooperate financially, or even provide an ongoing credit card processing facility. The last one fell away on Friday and therefore, with heavy hearts, but mindful of our responsibilities with regard to wrongful trading, the Board of Wrapit plc set the insolvency wheels in motion.”
Wrapit has now ceased trading, and the administrators are assessing which stock has been allocated to customers with the aim of delivering paid-for allocated goods over the next two weeks. However, if the company does not hold goods specifically allocated it will not be able to fulfil those orders.
Gelardi said that HSBC would refund anyone who bought gifts through Wrapit using a credit card or Visa debit card. However, people who bought using a Switch/Maestro card or cheque – some 20% of purchases – will lose out.
Wrapit vouchers are no longer valid and cannot be redeemed. Voucher customers will be able to register themselves as unsecured creditors, but they are unlikely to be refunded.
Equally, shares in Wrapit are now said to be worthless.
Gelardi told customers that the situation was not “the fault of the Wrapit employees, franchises and consultants, who have been dealing with a nightmare situation for many weeks and who have been working with little prospect of pay for the last month”.
Meanwhile, Pepita Diamand emailed suppliers yesterday, describing the circumstances as a “terrible position” and saying that she was “absolutely devastated” about newly-weds who would be affected.
The email added: “Our suppliers will go unpaid; some of which will be placed in a very precarious position by today’s announcement.”