Was AVRO trading illegally or fraudulently for the last 2+ years? Was it like a Ponzi Scheme?

BobT36

Wow! Now how much will the directors be held accountable for I wonder..?
I bet all that "marketing" money (for a company that apparently didn't do marketing) is all spent now, what a shame. 

MWT

BobT36 said:

Wow! Now how much will the directors be held accountable for I wonder..?
I bet all that "marketing" money (for a company that apparently didn't do marketing) is all spent now, what a shame. 

If you read the full document filed by the administrators there are comments in there that indicate they will be looking at the transactions people have been getting animated about to see what can be recovered.

For the rest, having read the document I would guess that there is little other than those transactions that will cause problems for the directors as it appears that they have been prudent in taking advice and managing the entry of the business into administration.

Where they were not prudent, but equally unlikely to be liable either is in the decision not to hedge any of their energy supply contracts...

This obviously proved to be a poor choice but not one in itself that is going to get them prosecuted for anything.

ihatetrump

Interesting Filing on Companies House today:

https://find-and-update.company-information.service.gov.uk/company/10334106/filing-history




This is for a compulsory strike off of Avro Group (owned by Jake & his dad). Its' significance is because this company owns AVRO Data & Technology (which was only set up last year) and this company is in control (60%) of Dyball Holdings 

The Companies House filings for Dyball (both Associates & Holdings) are a little vague and incomplete, but it appears that AVRO (and their various companies) took control last year.

The significance of this is that Dyball is the company that setup and sold on multiple Energy Supply Companies (named after US States) apparently with OFGEM supply licences either available/included or with the ability to obtain them.

 There's more to be unearthed here I'm sure, but it certainly points to a very murky world in the deregulated Energy Supply Industry.  

MWT

This is a routine notice caused by the failure to file accounts.

It doesn't in itself have any more significance than that.

Bendo

ihatetrump said:

The administrators for Avro have issued their proposal - filed on Companies House.

How deeply AVRO  were in the do-da is reflecting in this eye watering comment in their report:



£258 million !!!!!!!! - not even their gullible customers could stump up that amount.....

Not sure how you judge the customer to have been gullible. As there was zero risk to customers it was perfectly prudent to go with Avro. Indeed those more switched on could have foreseen what was coming too and jumped just before prices sky rocketed.

ihatetrump

Reference to 'gullible' really relates to the way customers were milked into having large credit balances - on the basis of building up a reserve to pay for the winter fuel. The Administrators have estimated advance customer payments totalled £90 Million at the end of September and trade debtors were £45M. There's no way of knowing how many of the reported 580,000 customers owed money vs how many had paid in advance. 

What is certain however, is that the advance customer payments were not used to buy future fuel by AVRO - because their "simple economics" (quote from 22 year old CEO Jake Brown back in 2016) didn't stretch as far as hedging - they bought when they needed it and although they had £25M as prepaid supplies when they went under, that represents less than 2 weeks of supply.

I can't disagree with @Bendo about 'those more switched on', but how many of those with large credit balances could afford the luxury of bailing out and leaving their credit balances to be refunded while the SoLR process goes through and start building again with a new supplier? I was in a similar situation with Igloo - so yes, I'm one of the gullible ones also - it's taken me 2 months to get my £600 credit balance back. 

Gerry1

The only gullible people are at Ofgem...

ihatetrump

Gullible maybe - except it won't cost them anything - they'll just increase the levies imposed on Energy Companies to pay for their Regulatory failures - so the customer pays in the end - like they always do!

wakeupalarm

https://www.citizensadvice.org.uk/about-us/about-us1/media/press-releases/catalogue-of-errors-at-ofgem-leaves-consumers-with-multi-billion-pound-bill/


Pretty damming report from Citizens Advice.  Some highlights in relation to Avro Energy.

Avro Energy case study

Avro Energy (failed Sept 2021) will cost consumers an estimated £679 million.

On 10 separate occasions from 2018 to 2021, Citizens Advice raised concerns with Ofgem regarding Avro Energy, as the company’s customer base grew from 210,900 to 590,000.

• 2018 - Citizens Advice issues formal letter to Ofgem raising concerns about Avro’s potential breaches of licence conditions

• 2019-21 - Citizens Advice raises multiple concerns regarding Avro’s conduct on transfer blocking, billing errors, and poor customer service

• September 2021 - Avro collapses, owing creditors £250m and leaving consumers with a £679m bill.

• Administrators for Avro Energy said the company had ‘’no external funding’ and was financed through ‘working capital generated by its trading operations

• The administrator for Avro said that it lacked any hedging instrument for its energy purchases
  

• An elderly customer with severe health problems had over £1100 taken from their account, even though they were in credit.
  

ihatetrump

• Administrators for Avro Energy said the company had ‘’no external funding’ and was financed through ‘working capital generated by its trading operations

And the Directors/Shareholders didn't make any significant investment of their own wealth into the company (£100 to be exact)

It is this method of taking significant advance customer payments (£90M at last count) - but not to buy future energy supplies (no hedging/forward purchasing arrangements in place) but to fund the running expenses of AVRO and (incredibly) blatantly milking it for their (Shareholders/directors) own personal benefit - making interest free loans to their own companies that were not even remotely related to the Energy sector. 

Every single Energy consumer in the country will eventually pay the price of these ill-gotten gains through paying higher prices - probably for years into the future.

Hopefully the administrators and relevant authorities will track down the Director/Shareholders' other investments and seize them and proceed with criminal charges.