Thursday, 14 July 2016 14:06

Crowdmix Ltd in Administration

London based start-up Crowdmix Ltd was in the process of developing a social media music platform. But before it could even launch its product fully, it ran out of money despite having previously raised £14 million in funding.

As of Monday 11 July, 2016, it has left its creditors, many of them freelance contractors, tens if not hundreds of thousands of pounds out of pocket. If you’re owed money by Crowdmix the prognosis for recovery is not good, so let’s look at what happens next.

How Did We Get Here?

On the surface, Crowdmix was a promising tech start-up with offices in London and LA. Behind the scenes, things were not going well.

Crowdmix first showed signs of problems back in April, when it laid off almost 10% of its employees. In June, it was reported that it had failed to pay its remaining staff the salaries they were owed for May. Rumour is Crowdmix tried to secure additional financial help to prop up its operations, but it was unsuccessful in securing additional investment.

The company originally raised £14 million in venture capital funding, marketing itself as a music-based version of Instagram. It was headquartered in London, and was poised to launch what promised to be an exciting new service for music lovers.

But the writing was on the wall for Crowdmix for some time. Its CEO, Ian Roberts, suddenly quit the company around the same time that salary payments were missed for the second time.
 
When Crowdmix told staff not to come into work in June and with many freelancers and contractors being owed for multiple months of invoices, it was pretty clear that the company had hit the iceberg that it had been lurching towards for several months.

Content continues below

Small Businesses Haemorrhaging £50bn a Year in Unpaid Work

A new report has confirmed the shocking impact that unpaid B2B debts have on the UK economy. A survey of SMEs by Amicus Commercial Finance found that the average small business in the UK writes off a…

Four reasons you should ask your new client for a deposit

When you sign up a new customer or client, it’s tempting to skip the formalities. New customers are always keen and it seems like nothing can go wrong. The last thing you want to do is sour the…

Online streaming has Blockbuster screaming (again)

It seems only fitting that Halloween week should be the moment when Blockbuster Video - one of the UK's biggest zombie businesses - reveals that, for the second time in ten months, it is lurching…

Will Late Payments Make It Onto The Election Radar?

With a little under a month before the UK goes to the polls - again - following PM Theresa May’s snap general election call, it is difficult to know on what ‘issues’ the public will be basing their…

The Administration Process

Crowdmix’s creditors are a mixture of paid, full-time staff and freelance contractors. The latter group is still waiting for invoices to be paid and every freelance creditor we have spoken to is owed at least two or three months of invoice payments. Unsecured creditors like freelancers and other suppliers now face a long wait, depending on if the administrators can find a buyer for the company or how much of Crowdmix’s intellectual property can be sold off.

As an unsecured creditor initially you’ll be asked to fill in a Proof of Debt form, and the administrator will then compile a list of what is owed. Thereafter, there’s a possibility that the administrators could try to sell the intellectual property the company has completed so far. Crowdmix had already offered a private beta, so there’s potentially something usable that could be sold to boost funds for people who are owed money, and help to settle unpaid invoice claims more quickly.

Whatever happens, Crowdmix’s staff will be first to be compensated – as in a worst case scenario wages and redundancy pay is covered by the National Insurance Fund. But freelancers and commercial suppliers will be considerably further down the list.

The more you are owed, the more change there is that you’ll have a say in proceedings. You may be able to call meetings, for example. But there are costs and delays involved at every stage, so get your claim in and wait for updates.

Help! Crowdmix Owes Me Money!

If you are an unsecured creditor of Crowdmix Ltd you can’t now take any action to recover the debt, as the appointment of the administration protects the company from any debt collection or legal action. The administrators of Crowdmix are:

David Ruben & Partners

26-28 Bedford Row
London WC1R 4HE
T 020 7400 7900
F 020 7242 3233
DX 267 LONDON/CHANCERY LANE

If your company isn’t contacted by the administrators in the coming weeks, then you should contact them on the details below and ask to lodge a claim. You aren’t under any obligation to continue to supply Crowdmix from the 11th onwards and if you do it must be agreed by the administrator in advance.

Prevention is Better Than Cure

Like illnesses, bad debts are often preventable and Crowdmix had been displaying increasing symptoms of insolvency for at least the last three months.

As discussed in our article ‘10 ways to spot a bad credit risk’ the outward signs of an impending ‘corporate heart attack’ caused by a lack of available cashflow had been visible for some time. Wages and invoices being bumped; combined with staff layoffs and the rapid unannounced exit of senior management shows a company clearly in distress.

Whilst downing tools and withdrawing services from a company can seem like a retrograde step, especially when a company continually promises a vital transfusion of capital is coming. But sometimes it is better to cut off the insolvent client rather than allow the infection of unpaid invoices to kill your cashflow and make your business another of victim of a corporate insolvency.

If you have a client or debtor that you think might be financially unhealthy, feel free to contact us for a free, no obligation, corporate health check.

Over 150 Years Of Industry Experience

Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.

Image Money Down The Drain used with kind permission of flickr user Images of Money used under the Creative Commons License

8:00 - 20:00

8:00 - 20:00

Our Opening Hours Mon. - Fri.

+44 1772 454505

+44 1772 454505

Call us for a free consultation. No hard sell, guaranteed. 

© 2017 Safe Collections is a trading name of Safe Collections Limited. Company Number: 01815264. VAT Number: GB407358159. All Rights Reserved.