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Tuesday, 4 August 2009

Downside of Pre-pack for Cobra Beer Creditors

Cobra Beer pre-pack administrator's report published.

Creditors set to lose £71m reports The Mail on Sunday Business section.

It says that a report by administrators from PricewaterhouseCoopers into the Indian lager company founded by Lord Bilimoria found there were 340 unsecured creditors that are unlikely to get any of their money back.

Wells & Youngs, which brewed Cobra beer under licence, has losses of £1.9m.

The report found that Cobra, which never made a profit, was in desperate need of funds by February 2008 so the directors decided to sell up. By last January there had been just one offer, from Wells & Youngs, but this was rejected.

Then Cobra's creditors demanded that it pay its bills, leaving it vulnerable to a winding-up petition.

Brewer Molson Coors paid £12m for the company after it went into administration.

Lord Bilimoria, who once claimed Cobra could be worth £150m, is a director of the new company

So the classic complaint of pre-pack administration is that unsecured creditors get nothing is demonstrated in this case. I would be interested in the views of the administrator regarding the directors. This company, under the direction of Bilimoria, never made a profit as he vowed to go for growth not profits. Seems that this model was found out!

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