The Leeds-based merchandise specialist raised more than £690,000 from investors in a crowdfunding exercise four years ago, when it expanded into the USA with an operation in Texas.
At the time the firm was flying high, but in recent months it has been under fire from customers for poor performance and missing/late orders and refunds, with a slew of negative reviews on sites including Trustpilot and Facebook.
The business specialised in merchandise and promotional items for musicians, festivals and creatives and was hit hard by the pandemic shutdown of events, along with other issues that affected trading.
In an update to investors on Crowdcube Hodson said that administrators had been appointed on 25 August.
The company handling the administration has not been named. It appears that a pre-pack sale of its assets, website and intellectual property has been made to newco Print.inc Group Ltd.
Hodson set up Print.Inc Group on 12 August and is currently the sole director and shareholder.
In his Crowdcube update, Hodson said: “It’s with a heavy heart that administrators have been appointed to Awesome Merchandise Ltd today. Awesome Merchandise Ltd had been greatly impacted by the pandemic, reduced market activity, internal and external factors.”
He said that it had not been possible to find a solvent solution “despite months of efforts to refinance, find investment or sell the company”.
“I am deeply sorry that I was not able to carry Awesome Merchandise Ltd and its investment from the Crowdcube community to a successful exit or return on investment. Many investors big and small are close friends and family. Many others are long-term customers, partners and suppliers.”
Hodson said that the jobs of 93 employees had been saved, and would TUPE across to Print.inc Group.
“This will allow the factory to remain open and for customer orders to be fulfilled. The current work in progress has now been picked up under the new company and will be processed over the coming two-to-three weeks. Credits will be offered to customers that cancelled orders,” he stated.
Printweek understands the firm had also experienced issues with some key items of equipment.
Responding to criticism of the pre-pack on Crowdcube, Hodson stated: “There are external factors that materially changed the trading position of Awesome in 2021 and 2022. I am not permitted to go into detail because of ongoing legal disputes. What I can say is that ultimately two giant corporations that were partnering with Awesome, caused massive loss and disruption and materially impacted ability to trade properly or move forward with plans.”
Unsurprisingly, many investors in the business expressed dismay at the outcome, and urged Hodson to offer the original backers shares in the new business.
Investor ‘rjevans100’ commented: “Strange sudden collapse from the upbeat updates received a few months ago.
“Disappointing that it has been done as a prepack to sell it to yourself – rather than offering investors the option of considering a CVA to partly repay creditors and remain invested.”
Another investor, ‘Viking66’, said: “More details please and the full facts, especially around the ‘new company’ and your intentions – if any – to recompense all the investors who believed in you. Investors who believed in that you would honour your narrative.
“Though there is no obligation to grant equity in the newco, the honourable thing would be to do so. Blaming the pandemic is now always the easiest thing to do, retaining some semblance of reputation is far more important and is now key, especially if you aim to seek further investment at some future point in any future venture you may be involved in.”
Hodson co-founded the business in 2005 with his wife Charlotte. She ceased to be a director in September 2020.
In 2021 group turnover at Awesome Merchandise reached £9.5m-plus (up from £7.98m in 2020 and £5.5m in 2017), according to the Crowdcube updates.
Printweek was unable to reach Hodson for further comment at the time of writing.
Update: the joint administrators are Nick Holloway and Howard Smith from Interpath Advisory.
Smith said: “Awesome Merchandise is a bespoke business with strong B2B relationships across the music industry which, unfortunately, like many other companies, experienced significant financial challenges as a result of Covid-19. We’re delighted to have completed this transaction which secures the future of the business, as well as safeguarding the jobs of 94 employees working out of the Head Office in Leeds.”
