Newly-weds left in limbo as gift firm flops
Wedding gift company Wrapit has denied reports that it has gone into administration but has admitted that it is experiencing “financial difficulties”.
Despite reassuring its customers that it is currently working on a rescue package, the firm’s uncertain future has left thousands of couples concerned that they might never receive their wedding gifts, and that their families and friends may be left out of pocket.
Wrapit, which says it has delivered nearly half a million gifts for couples during its six years of trading, has stopped manning its phones as a result of high volumes of calls from concerned customers. However, in an automated message it promises to post updates on its website. No news has been posted as yet.
And in an email, sent 25 July to customers, its founder and retail director Pepita Diamand writes: “You have probably heard or read recently that Wrapit is in financial difficulty. I'm sorry to tell you that this is correct. However, we are not in administration, as has been claimed.”
Diamand also urges customers to remain calm, adding “the chances are that your list will be fulfilled in the normal way, if, perhaps, a bit late.”
The firm claims that its current financial difficulty is the result of its bank, HSBC, announcing “without warning” that it was concerned about how the firm would make refunds if it was unable to deliver goods purchased. Diamand says as a result of moving credit and debit card revenue into a separate account, it was unable to pay suppliers.
A spokesman for HSBC says its confidentiality agreement with Wrapit meant it was unable to comment on the firm’s descent. However, he adds: “HSBC is a responsible lender and believes it is doing all it can to assist the directors. We now await the outcome of the company’s discussions with its advisers and very much hope that the company will be able to continue trading.”
The firm also claims it was due to receive new funding from a third-party, but this deal fell through. It is now in talks with insolvency practitioner, KPMG, about securing a financial package.
Diamand says Wrapit has enjoyed six years of “successful trading and rapid growth”. However, a quick look at the firm’s records at Company’s House reveals that the firm has been loss-making every year since 2002.
And despite featuring in several wedding magazines as a good place to buy gifts, customers’ experiences with the firm appear to be less successful.
A Facebook group, called ‘Wrapit’s wedding list service – worst customer service ever?’ was set up by Amy and Craig Hinchliffe to bring people together who have suffered bad service and delays at the hands of the firm.
Neil Willis, a 31-year-old sub-editor from London, and his wife Hannah are just two customers affected by Wrapit’s financial difficulty. They received an email from Wrapit (printed below) on Friday 25 July – just two days before their wedding.
Neil Willis told Moneywise: “We chose Wrapit because it was recommended in a wedding magazine, plus friends had used it and it has showrooms in London. We picked around £4,000-worth of gifts on the website, and estimate that our friends and family purchased about £2,000-worth.
“We were told we wouldn’t receive our gifts until the list is closed, which won’t be for three months. We are hoping that we either get the gifts or our guests get their money back but right now we don’t know what will happen.”
Email to Wrapit customers:
Important Message to Wrapit Couples:
You have probably heard or read recently that Wrapit is in financial difficulty. I'm sorry to tell you that this is correct. However, we are not in Administration, as has been claimed.
As you have a list open with us I am sure that this news will cause you grave concern and you will want to know that you will receive your gifts as we promised and, at the very least, that the money that your friends and relatives have so kindly given us on your behalf will not be lost. We owe you an explanation, so here it is ...
After six years of successful trading and rapid growth we ran into a problem in May when our bankers, HSBC, announced without warning that they were concerned about the potential chargeback risk if Wrapit was unable to fulfil its obligations to guests to deliver the gifts purchased. Their solution was to sequester all our credit and Visa debit card revenue into a separate account to provide them with added security. This meant that we were unable to pay suppliers and sometimes resulted in late delivery of gifts.
The solution was to raise some additional cash to satisfy the bank and put the company back on an even keel. We were due to complete on this funding next week. However, the deal fell through on Wednesday evening. Since then we have been working with our advisers, KPMG, so to secure a financial package, fast. They believe that this should be possible within about a week.
So, the chances are that your list will be fulfilled in the normal way, if, perhaps, a bit late. However, nothing is certain and we must address the situation if Wrapit does end up in more serious trouble. In this case, you need to know that most of your guests will be able to get their money back through their credit/debit card provider. They simply need to let them know that the gift they bought was not delivered in the specified time frame and they will get a refund without question. This applies to all credit cards, Amex cards and Visa debit cards. Together, these make up more than 80% of gift purchases.
I can't tell you how sorry I am that you have become embroiled in this difficult situation at a time which should be a very happy one for you. We are doing all we can to ensure that it will all turn out alright in the end and we will keep you posted with progress via regular updates on the website.
We must also urge everyone to stay calm. We are being inundated by incoming calls and emails, which are overloading our systems. A rush on Wrapit at the moment isn't going to help anyone right now. In fact, it may well be counter productive to the efforts being made by our advisors to secure everyone's future.
Please understand that we cannot respond to your emails individually at the moment. If you have to contact us please email firstname.lastname@example.org. However, I promise to keep you posted so that any news you hear about Wrapit will be from us first.
We look forward to giving you better news next week and to getting back to normal soon.
Retail Director and Founder
Generally speaking, insolvency is to businesses what bankruptcy is to individuals. A company is insolvent if the value of its assets is less than the amount of its liabilities, or it is unable to pay its liabilities (loan payments) as they fall due. It’s an offence for an insolvent company to keep trading, so the main options available to an insolvent company are: voluntary liquidation, compulsory liquidation, administration or a company voluntary arrangement.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.