Faith in FQR management “misplaced”

The managing director of Mentzendorff has admitted suppliers’ faith in the management of First Quench Retailing to keep it afloat was “misplaced”.

Many in the trade have questioned the wisdom of companies which continued to trade with the company after it became clear FQR, which traded under the Thresher, Wine Rack, The Local, Bottoms Up, Victoria Wine and Haddows banners, was facing financial difficulties.

Mentzendorff was owed a total of £488,000 by FQR when it collapsed into administration in October last year.

The managing director of Mentzendorff, Andrew Hawes, confirmed that the company was exposed to substantial losses following the collapse of FQR.

However he added that following the successful pursuit of the company’s Retention of Title claim, Mentzendorff has recovered significant quantities of stock that had been held in FQR’s bonded warehouse and claims that this will, when re-sold, greatly reduce the company’s final losses.

He said: “Many in the trade and indeed external commentators will question why so many companies continued to supply FQR when there was uncertainty over the sustainability of the business.

“It has already been reported that many believed the management had a recovery plan in place and the injection of a further large capital sum by the owners certainly created an atmosphere of increased confidence amongst suppliers ahead of the Christmas buy-in, which obviously turned out to be misplaced.

“In addition some were perhaps also motivated by a belief in the specialist sector and its capacity to provide a premium and differentiated offering to the consumer. Ultimately FQR weren’t able to do this – but this should not be taken as sounding a death-knell for the remaining players in the multiple specialist sector for whom we can see many potential opportunities.

“It is also very encouraging to see many independents taking the opportunity to expand from one to two/three or more shops and indeed some completely new entrants to the sector emerging to pick up ex-FQR stores and we look forward to talking with all these operators.”

Fellow merchant John E. Fells & Sons adopted a more cautious approach to trading with FQR amid uncertainty over the viability of the business.

Paul Symington, joint managing director for Symington Family Estates and the chairman of Fells, told the drinks business: “The management made a series of very difficult decisions when it became apparent FQR was struggling, and we decided to cease trading with them a good few months before the collapse.

“This decision was greeted with a fair amount of surprise by the industry and there were certainly people who disagreed with our stance, however as a result of our approach we came out of the collapse with far fewer losses than others.”

Documents released by the FQR joint administrators show that Fells was owed £47,702 by the failed company when it went under, as reported by the drinks business last Friday

However the wine merchant received a substantial payment from the FQR administrators in October, leaving it with a total net owing of a little over £10,000.

Alan Lodge, 11.01.2010