Frequently Asked Questions
Former Customers of the Company
Creditors of the Company
Q1: Why did Powwow Water Company Limited (“the Company”) go into Administration?
We understand that during January 2010 and early February 2010 the management team had entered into discussions with Absolute Invoice Finance (“AIF”) to negotiate a refinancing of the Confidential Invoice Discounting (“CID”) facility. As a result of the protracted discussions between the Company and Nestle Waters (UK) Ltd, the negotiations with AIF were ultimately unsuccessful.
The Company continued to suffer significant cash flow problems throughout February 2010 and in March 2010 Clydesdale Bank PLC (“the Bank”) instructed Deloitte LLP to carry out an independent review of the business in an attempt to identify potential restructuring options. This review did not progress as it became apparent at a very early stage that the Company's financial records were wholly unreliable.
Since our appointment it has become apparent that in the months preceding our appointment the Company was managing its customer relationships poorly, severely impacting the goodwill of the business. This was compounded by weak financial management and inadequate controls, no visible communication with customers and its inability to accurately record the volume of transactions within the business. As a consequence, due to the significant number and backlog of customer complaints, the uncertain financial position, significant creditor stretch and the lack of visibility over the underlying business, the Bank withdrew its CID facility. In addition, as the directors were unable to secure any new 3rd party funding and were unwilling to provide any additional personal capital to the Company, the Bank, as QFCH, was left with no other alternative than to appoint Administrators.
Control of the Company has been passed to the Joint Administrators, Mr John Charles Reid and Mr Brian William Milne of Deloitte LLP who will now make all decisions going forward. An Administrator is an independent third party appointed by the Court who remains under the control of the Court of Session, Edinburgh. The Company is not in liquidation, which is a different insolvency process.
Q3: I no longer want my water cooler and related assets. What do I do with them?
The Company sold its mains and bottled water coolers and related operational assets to Wild About Water (UK) Limited (“WAW”) in April 2010. Following this sale we understand that WAW sold the bottled water coolers and related operational assets to Eden Springs (UK) Ltd (“Eden Springs”). The Company no longer has any claim against any of these assets and so customers should contact WAW or Eden Springs to arrange collection. WAW can be contacted on 0845 0743 892. The Administrators do not have contact details for Eden Springs.
The Company sold its mains and bottled water coolers and related operational assets to Wild About Water (UK) Limited (“WAW”) in April 2010. Following this sale WAW sold the bottled water coolers and related operational assets to Eden Springs (UK) Ltd (“Eden Springs”). The Company no longer has any claim against any of these assets.
The Company has sold any right, title and interest it may have in any customer contracts to Wild About Water (UK) Limited (“WAW”). The Administrators are unable to advise customers on the legal position regarding their contracts. The Administrators will not pursue any former customers of the Company for breach of contract.
All deposits paid to the Company will rank as ordinary unsecured claims. The prospects of a dividend for ordinary unsecured claims and the manner in which claims can be made are detailed in FAQ 10 and 11. We understand that Eden Springs (UK) Limited (“Eden Springs”) holds the title to these assets and should be contacted regarding collection. There is no right of set-off between outstanding debts due to the Company and ordinary unsecured claims against the Company.
All outstanding invoices are due and payable immediately. I would advise that Wild About Water (UK) Limited (“WAW”) is instructed to collect the Company’s book debts on behalf of the Joint Administrators. No other entities are authorised to collect debts on behalf of the Company.
For the avoidance of doubt, all customers may continue to make payments to the Company’s pre-administration bank account held with the secured creditor, Clydesdale Bank PLC with sort code 82-20-00 and account number 80521906. This bank account is continuing to accept funds.
The secured creditor, Clydesdale Bank PLC has also set up a post-administration bank account with sort code 82-64-19 and account number 090097001. This bank account is also accepting payments of outstanding invoices.
I would advise that Wild About Water (UK) Limited (“WAW”) is instructed to collect the Company’s book debts on behalf of the Joint Administrators. WAW can be contacted on 0845 0743 892. Customers should ask to speak to Kellie Champion or James Hookins.
The Company sold its mains and bottled water coolers and related operational assets to Wild About Water (UK) Limited (“WAW”) in April 2010. Following this sale we understand that WAW sold the bottled water coolers and related operational assets to Eden Springs (UK) Ltd (“Eden Springs”). Customers should contact Eden Springs regarding ongoing supply of bottled water.
Q10: What do the different types of creditor ranking mean?
These creditors hold some form of security for any debts outstanding from the Company, which has been appropriately registered. This security is often in the form of a fixed charge over specific assets of the Company.
These are in schedule 6 of the Insolvency Act 1986 (As amended) and include such creditors as pension schemes and employees. All such claims are subject to statutory limits, which are amended from time to time.
Floating Charge Holders
These creditors hold security over assets of the Company, which are not generally able to be identified specifically or represent the working capital of the Company. The charge crystallises under certain conditions of which appointment of Administrators is usually one.
All other creditors rank as unsecured creditors and rank “pari passu” (equally) with each other in their claims for Company assets.
Secured creditors have the first claim on assets over which they have security. Any surplus and any assets without a fixed charge are available firstly to preferential creditors, then floating charge holders, then unsecured creditors.
After discharging the costs of the Administration, it is envisaged that there will be insufficient realisations from floating charge assets to repay the Bank in full. Accordingly, we do not expect any funds to be available to pay a dividend to the unsecured creditors of the Company other than by distribution under the Prescribed Part. No funds are expected to be available under the Prescribed Part.
All forms have been submitted to the Redundancy Payments Office. As the processing of these is outside of the Administrators control, we are unable to provide an estimate of when payments will be made.
Q13: I dealt with Nestle Waters Powwow. Have Nestle also entered Administration?
During December 2008 the Company's management team entered into negotiations with Nestle Waters (UK) Ltd (“Nestle”) to acquire its bottled water business, with a sale being concluded in February 2009 for an undisclosed deferred consideration. The Administrators have only been appointed over Powwow Water Company Limited.
Specific Administration legislation
The Administrators, as officers of the Court, will perform their functions and duties, in the interests of the company’s creditors as a whole, in accordance with the specific requirements of Schedule B1 of the Insolvency Act 1986 and the Insolvency Rules 1986.
The Administrators of a company must perform their functions with the objective of:
- Rescuing the company as a going concern, or
- Achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration), or
- Realising property in order to make a distribution to one or more secured or preferential creditors.
Information for Creditors
The Administrators are required to provide specific information to creditors as part of their ongoing duties, these are detailed as follows:
Initial notice of appointment – As soon as reasonably practicable after obtaining a list of the company’s creditors, the Administrators shall send a notice of appointment to each creditor;
Administrators’ Report and Proposals – The Administrators will issue this report to all known creditors within 8 weeks of the date of administration; and
Administrators’ Progress Report – The Administrators will issue this report, to all known creditors, within one month of each six month anniversary of the date of administration. However, the period covered by this report is subject to change if any extensions to the administration are necessary.
John Reid and Brian Milne were appointed Joint Administrators of the Powwow Water Company Limited on 25 March 2010. The affairs, business and property of Powwow Water Company Limited are managed by the Joint Administrators. The Joint Administrators act as agents of Powwow Water Company Limited and contract without personal liability.