Conviviality intends to appoint administrators within 10 business days after failing to raise the £125m it needed to secure its future.
In a statement on Thursday morning, the beleaguered Bargain Booze and Wine Rack owner said the board has resolved to appoint administrators, “unless circumstances change”, after discussions with its lending banks failed.
The retailer said it will continue to trade and work alongside advisers ”to preserve as much value as possible for all stakeholders”.
It reaffirmed its intentions to explore “a number of inbound enquiries regarding a potential sale of all or parts of the business”.
Retail Week understands that PwC has been lined up to handle the administration, which leaves more than 2,600 jobs hanging in the balance.
Conviviality revealed earlier this month that it had failed to account for a £30m tax bill and launched a share placing last week in a bid to raise emergency funds.
However, the drinks retailer and wholesaler has been unable to secure sufficient capital required to pay off HMRC, its creditors and “provide [the] working capital headroom” it was seeking.
Conviviality said in a statement on Wednesday: “Despite a significant number of meetings with potential investors resulting in good levels of demand, and constructive discussions with a number of key customers and suppliers regarding the provision of support, there was ultimately insufficient demand to raise the full £125m.
“The board wish to thank its customers, suppliers and employees for their continued support during this difficult period for the company.”
The business admitted that shareholders would receive “little-to-nil value” from the final outcome.
Fall from grace
Administration would mark a rapid fall from grace for Conviviality, which had broadened its business into the wholesale arena under the leadership of Diana Hunter, after acquiring suppliers Matthew Clark and Bibendum.
It also snapped up Peppermint to move into the events business, piloting a shop at the Isle of Wight Festival as it sought to broaden its customer base.
But the business was forced to issue a profit warning at the start of March, blaming a “material error” in its financial forecasts.
It said the forecasting error within its Conviviality Direct division, which includes Matthew Clark and Bibendum, meant EBITDA in the year ending April 29 would come in £5.2m below expectations.
Days later it suspended its shares and informed the City of the £30m HMRC bill.
Hunter quit the business last Monday in the wake of the crisis and days later it warned that if it was “unable to raise funds by way of the placing or otherwise, it is unlikely to be able to trade on a going concern basis”.
As well as operating the Wine Rack and Bargain Booze fascias, Conviviality supplies more than 700 off-licences and 23,000 pubs and restaurants across the UK.
Its collapse would deal another blow to the high street, weeks after Toys R Us and Maplin tumbled into administration.