Delivery firm backed by Martin Lewis goes bust owing almost £6million
A DELIVERY firm backed by the founder of MoneySavingExpert.com, Martin Lewis, has gone bust, leaving shareholders millions of pounds out of pocket.
Magway Limited, an Ocado-backed tech firm that aimed to revolutionise UK deliveries with a network of pipes, has entered voluntary liquidation.
Voluntary liquidation is when a company’s directors or shareholders decide to wind up and dissolve the company’s affairs.
Founded in 2017 by Rupert Cruise, an engineer involved in Elon Musk‘s Hyperloop project, and business expert Phill Davies, the UK startup Magway Limited aimed to revolutionise the freight delivery system.
Shareholders, including Martin Lewis, the company’s third-biggest investor, are set to lose over £5.7million.
However, the grand vision has crumbled, and Magway Limited has now appointed liquidators, as first reported by The Grocer.
The company envisioned transporting goods in pods through new and existing 90cm diameter underground and overground pipes, reducing road congestion and air pollution.
The initial route was planned between Ocado‘s sites in Hatfield and Park Royal, west London, with additional routes intended to link UK airports to small distribution centres.
Magway also had plans to repurpose over 850km of decommissioned London gas pipelines to create tracks for delivering e-commerce goods directly from distribution centres to consumers in the capital.
The founder of MoneySavingExpert.com had substantial control of the business until 2019, but it is unclear whether he withdrew his investments before the company filed for insolvency.
A representative for Martin Lewis declined to comment.
Magway owes over £40,000 in taxes to HMRC and over £47,000 in arrears and holiday pay to employees, leaving just over £74,000 left in the bank.
Liquidators Alvarez & Marsal will be selling Magway’s assets, including its intellectual property.
Phil Davies, the company’s co-founder and chief executive, said, “We were trying to bring in funds from investors and clients but unfortunately ran out of runway.
“It is a great shame. The team worked tirelessly until the very end.”
Despite this, Davies remains proud of the team’s achievements, stating: “Over the last seven years, we have gained global recognition, won numerous awards, filed multiple patents, and built working prototypes.
“I firmly believe Magway’s innovative technology still holds huge potential.”
HARD TIMES FOR BUSINESSES
Last month, The Fourpure brewing company was placed into administration to “protect itself from market pressures”.
Administration is when all control of a company is passed to an appointed licensed insolvency practitioner.
It doesn’t necessarily mean the end of the business.
Instead, administrators will try to help a company find ways to repay debts or solve its cash flow problems.
Its beers, such as Pomegranate IPA and Juiced Mango and Raspberry, are stocked in major supermarkets like Tesco, Asda, Waitrose and Ocado.
However, it’s not just small businesses that are taking a hit.
Major DIY and homeware chain Homebase crashed into administration yesterday.
Chris Dawson, owner of The Range, rescued 70 stores through a pre-pack administration deal.
The buyout has saved approximately 1,600 jobs, but around 2,000 jobs and 49 stores face uncertainty.
Administrators will now look for buyers for the remaining Homebase stores, which will continue to operate as usual for the time being.
In September, Tupperware Brands, the US maker of food storage containers, filed for bankruptcy.
In a statement to investors, Tupperware’s chief executive Laurie Ann Goldman, said the business had struggled amidst a “challenging” overall global economic outlook.
The rising cost of raw materials, higher wages and transportation costs has seen the company struggle financially.
Goldman added: “As a result, we explored numerous strategic options and determined this is the best path forward.
“This process is meant to provide us with essential flexibility as we pursue strategic alternatives to support our transformation into a digital-first, technology-led company better positioned to serve our stakeholders.”
Cosmetics company Avon also filed for bankruptcy after multiple lawsuits and financial struggles back in August.
What is bankruptcy?
BANKRUPTCY is a legal process whereby individuals can have their debts wiped.
In the UK, bankruptcy is typically applied to individuals who owe more than they can pay.
During a bankruptcy period, individuals face restrictions such as a maximum amount they can borrow.
Someone is usually discharged from bankruptcy after 12 months which means they are free from most debts.
However, their credit rating usually takes a hit which can impact whether they are approved for mortgages, credit or a personal loan.
Businesses who are struggling to pay off their debts usually face corporate insolvency.
Insolvency lets a company either restructure and recover financially or be wound up and its assets liquidated.
There are three main types of corporate insolvency, which are:
- Administration
- Company Voluntary Arrangement (CVA)
- Liquidation
Ted Baker collapsed into administration back in March and all 46 stores shut forever.
The Body Shop met a similar fate in February.
Wilko entered administration in August last year after PricewaterhouseCoopers (PwC) failed to secure a rescue bidder.
However, the brand name has since made a comeback on the high street despite the closure of 400 stores.
Since the start of 2023, Paperchase, M&Co, and Cath Kidston have also fallen into administration.