Awesome Merchandise strives to regain customer trust

Jo Francis
Friday, September 23, 2022

Awesome Merchandise’s Texas operation has been shut down as the firm strives to rebuild its reputation following last month’s pre-pack sale to its co-founder, while funding platform Crowdcube is in talks about the possibility of shares in the newco being issued to more than one thousand investors who were wiped out.

Luke Hodson: pre-pack purchase was backed by his father
Luke Hodson: pre-pack purchase was backed by his father

The 2018 crowdfunding campaign raised more than twice Awesome’s original target at a time when the firm was flying high. It reached a grand total of £690,290 and gained the support of 1,126 investors. The largest single investment was £40,000.

In their report to creditors, administrators from Interpath Advisory said that according to the latest management information, Awesome Merchandise had invested some £4.1m in the US subsidiary, which has now ceased trading. 

In an update, Crowdcube said it was currently working with the legal team at Print.inc Group Limited – Awesome Merchandise co-founder Luke Hodson’s new company, which acquired the Awesome Merchandise assets, IP and website via a pre-pack last month. 

Crowdcube said it was investigating the possibility of issuing shares in the new company to Crowdcube investors. “Whilst this is not guaranteed, we are continuing to have several discussions with Print.inc Group Limited and shall update you as soon as we can,” it stated. 

Print.inc Group acquired the Awesome Merchandise business and equipment, excluding leased assets, for £150,000: £50,000 on completion followed by a deferred consideration of £10,000 per week over ten weeks, according to the Interpath report.

The deal was funded by Hodson’s father William Hodson. All 94 employees were retained. 

It also required evaluation by the Pre Pack Pool due to being a related transaction. 

The only other offer received for the business was on an insolvent basis.

Interpath stated that Awesome Merchandise’s sales in calendar year 2021 were £8.2m and the net loss was £200,000. 

The administrators said that during 2021 the firm also experienced issues with its e-commerce provider “that had a material impact on cash flow, as a result of not being able to take credit and debit card payments for a number of months,”

In Q1 2022 the net loss was £400,000 on sales of £1.9m as the business began to unravel.

At the time of administration, unsecured trade creditors were owed £2.86m and the firm had a total estimated deficiency of nearly £5.7m.

HMRC was owed £1.97m. 

Barclays Bank was the secured creditor, with other unsecured loans from Funding Circle, Clear Co, Capify UK, Cap on Tap and on the company credit card totalling just over £1m. 

Interpath said it was highly unlikely there would be any dividend paid to unsecured creditors. 

In a statement posted on social channels, the 'new' Awesome Merchandise said that the administration had resulted in the closure of its US business, and the firm was now operating with new management working alongside Luke Hodson.

“Since the changeover to Print.inc Group we have been working hard and dealing with flushing through back orders and getting new orders out the door of the Leeds factory. 

“This effort and work is continuing and we expect turnaround times to continue to improve from this point forward.”

The firm thanked staff, past and present and the commercial partners and suppliers that had supported the newco. 

“We would love to continue making your orders but we understand that Awesome Merchandise as a brand will need to regain the trust of its customers, partners and the communities in which it operates. We will begin to do that now.”

The firm has turned off comments and replies on social media following a flurry of negative posts from angry customers who had been let down in the run-up to the administration. 

Interpath also noted that Awesome Merchandise (in administration) may be a claimant in two situations “that could result in realisations into the estate”. 

The nature of the claims are confidential at present due to commercial sensitivity. 

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