Misleading wine ‘investment’ company with ‘shadowy’ majority shareholder closed down following Insolvency Service investigation
APW Asset Management Ltd, a company which sold Australian wines to clients for investment and capital growth purposes, has been wound up by the High Court in Manchester on 25 March after making baseless claims that misled investors.
An investigation by the Insolvency Service found the company made a string of patently false claims as to the soundness both of the potential investment returns and of how wines sales would be handled.
In addition, the court heard that the company operated with a lack of transparency as to ownership and control. None of the company’s directors or personnel were able to provide information on the whereabouts or, indeed, existence of its 95% majority shareholder; and the control of the company does not appear to have rested with the appointed directors.
The company’s website claimed “APW proudly occupies the role of a ‘fiduciary’ in all its dealings, providing clients with a rare opportunity to obtain uncompromising and genuinely independent advice, free from conflicts of interest”. In contrast to this claimed role of fiduciary the investigation found that:
- since 2013 the main source of income for APW was from buying back wine from clients and reselling this wine to new clients, a process known as repack sales. Repack sales accounted for 91.2% of APW’s income by March 2014
- these repack sales resulted in the selling clients suffering an average loss of 44.3% on the price they had originally paid to APW for the wine
- APW then sold the same wine to new clients at an average profit mark up of 81.3%
- the new clients were unaware that the wine they were buying had been sold by other APW clients who had suffered sizeable losses
- the selling clients were led to believe that their wines were being sold by APW on the open market and not to new clients at a considerable profit to APW
- APW exploited the selling clients further by delaying or withholding payments due to them, including failing to remit in excess of £50,000 to the estate of a deceased client. The selling clients were falsely told that delayed remittances were attributable to extended settlement terms or to sales being made overseas when, in reality, the wine had been immediately sold to a new client who had made prompt payment to APW. The total amount due to clients in respect of unpaid remittances is estimated to be £600,000
- the delayed issuing of sales invoices and remittances to the selling clients has created confusion as to which client has legal title to the same wine
- by the company’s own calculation there is a deficit of 19,482 bottles of wine that should be held at a bonded warehouse on behalf of clients
Commenting on the case, Colin Cronin, Investigation Supervisor, said
APW used high pressure sales methods which emphasised the growth potential of its wine. Yet the viability of APW, in the latter years at least, depended upon its clients suffering losses on the wine they had bought for investment purposes. The company then cynically sold this same wine to new clients at a considerable profit for itself. This conduct is the very opposite of the fiduciary duty the company owed to its clients.
These proceedings show that The Insolvency Service will take robust action against companies which operate against the public interest in this way.
I am aware that APW clients are now being targeted by a variety of businesses who falsely claim to have buyers for the wine, or to be able to release wine held by APW, or who are offering wine management services for the payment of upfront fees. I would urge clients to exercise great caution if approached by companies which purport to be able to assist in recovering their past losses.
Similarly I would urge anyone cold-called and pressured to invest in any kind of investment to simply end the call as genuine investments are not likely to be sold in such a manner.
Notes to editors
APW Asset Management Ltd – company registration number 4618582 - was incorporated on 16 December 2002 under the name of Australian Liquid Assets Ltd. It changed its name to Australian Portfolio Wines Ltd on 22 January 2003 and to its current name, APW Asset Management Ltd, on 29 January 2013. The company’s registered office is at Pacific House, 382 Kenton Road, Harrow, Middlesex HA3 8DP.
The petition to wind-up APW Asset Management Ltd was presented under s124A of the Insolvency Act 1986 on 18 March 2015. The company was wound up on 25 March 2015 and the Official Receiver has been appointed as liquidator.
Company Investigations, part of the Insolvency Service, uses powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK on behalf of the Secretary of State for Business, Innovation & Skills (BIS). Further information about live company investigations is available.
The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice. Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is [available}(https://www.gov.uk/government/organisations/insolvency-service).
All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit, 4 Abbey Orchard Street, London, SW1P 2HT. Telephone: 0207 637 1110 Email: firstname.lastname@example.org.
Published: 26 March 2015
From: The Insolvency Service