Awesome Merchandise Ltd has provided services to businesses and individuals in the music industry, creatives and power users of print through its e-commerce platform.
The company previously raised £654,000 from 1,064 investors via a crowdfunding investment platform website called Crowdcube.
The company went into receivership on Wednesday and was immediately sold to a newly created company called Print.Inc Group Ltd, whose sole director is Luke Hodson – the man who founded Awesome Merchandise in 2009.
The business and assets of Awesome Merchandise have been sold to Print.inc Group Limited. The directors said all 94 staff at the company’s headquarters in Leeds would move as part of the sale.
A statement from the directors of Interpath Advisory said the decision to put Awesome Merchandise into administration was because the business, which relies on the live music and events business, faces a “challenging business environment”. due to the pandemic and associated lockdown measures.
Mr Hodson wrote on Crowdcube that the decision “will allow the factory to remain open and customer orders to be filled”.
But he admitted that Crowdcube investors would lose out.
“I am deeply sorry that I was unable to lead Awesome Merchandise LTD and its investment in the Crowdcube community to a successful exit or return on investment,” he said.
“Many investors, big and small, are close friends and family. Many more are long-time customers, partners and suppliers.
“Awesome Merchandise LTD has been the almost unique center of my life for 17 years. There are many factors that contributed to the administration and a more detailed report will be made by the administrators.
When challenged by a number of disgruntled investors on the platform, Mr Hodson posted a follow-up post.
He writes: “Despite what is being said, I did not simply ‘buy out’ the company with my own funds.
“Over the years, aside from the rise of Crowdcube, almost everything generated by Awesome has been reinvested into the business.
“The UK business actually saw almost £0 of Crowdcube’s increase because it was profitable and self-sufficient before the pandemic.
“Funding for the new company came from outside the family, after all other avenues had been exhausted. I am extremely grateful that my family helped me at the last minute to give me a chance to continue to to work in a field that I am passionate about and believe I have helped to benefit the UK print and creative markets as a whole.The belief shown by my family ultimately helped save the jobs of over 90 people.
“Three weeks ago today I was in a position where I had to liquidate the business completely.
“The transaction that was concluded had to undergo a lot of due diligence and external audits, it met the requirements set by law. It was the last type of agreement or option left open.
Darren Di Lieto is founder and creative director of Hireillo – a company that represents around 500 professional illustrators and invested £500 in Awesome Merchandise through Crowdcube in 2018.
He said that having been a customer of Awesome Merchandise in the past, he felt it was a positive investment to help the company in its stated plan to expand into America.
Mr Di Lieto said it became apparent a week ago that there were problems with the company when an illustrator he knew highlighted someone complaining on Instagram about not receive refund.
He said subsequent checks of recent online reviews confirmed there was a “major problem”.
Mr Di Lieto said he was unhappy to learn that Mr Hodson was the owner of the new business taking over the assets of Awesome Merchandise from administration.
“It feels like we as investors and shareholders are being ripped off with almost no consequences for the founder for the bankrupt company,” he said.
“The investors will not have been people looking to make money – they will have been mainly illustrators who have believed in the brand. It will have been mainly illustrators and artists who are part of the same community.
A spokesperson for Interpath Advisory Trustees said: “The legal ownership of the new entity can be viewed online at Companies House. Following an extensive marketing process, this course of action presented a better outcome for creditors (compared to a liquidation scenario which would be the likely alternative).
The spokesperson confirmed that Crowdcube investors will not be listed as creditors as part of the administrative process, which means they will not receive any money.
“Crowdcube’s backers as equity investors will not be unsecured creditors.”
Asked if Mr. Hodson stood by his actions, the spokesperson said: ‘We are not advising Mr. Hodson personally.
In an initial press release, Nick Holloway, Managing Director of Interpath Advisory and Joint Administrator, said, “We are delighted to have completed this transaction which provides continuity of service for Awesome Merchandise customers and, importantly, protects a number of jobs.
Howard Smith, Managing Director of Interpath Advisory and Joint Administrator, added, “Awesome Merchandise is a bespoke business with strong B2B relationships in the music industry which unfortunately, like many other businesses, has struggled. We are delighted to have concluded this transaction which secures the future of the business, as well as safeguarding the jobs of 94 employees working at the head office in Leeds.
There was no response when the Yorkshire Post attempted to contact the offices of Awesome Merchandise.
Crowdcube has been contacted for comment.