WMGO caves in as debts mount

Woollams Moira Gaskin O’Malley has collapsed with debts approaching 900,000. Twenty people have lost their jobs. It is the biggest agency collapse for five years.

The troubled ad agency had been dogged with speculation for several months. It announced it was buying itself out of WMGO plc, the publicly listed holding company, in April, but by June had lost the 10m Mercury One-2-One account. This proved to be the final nail in its coffin.

The holding company, which retained a ten per cent stake in the agency, is changing its name to Incepta plc.

The agency has held talks with at least six agencies, including the Osprey Group, in the past few weeks to try to sell the company as a going concern. However, Touche Ross was appointed as administrative receiver last Friday at the request of the agency’s main creditor Coutts Bank. It could not persuade any of the agencies to take control.

The size of the debts will surprise many people. Although the agency has lost big name accounts this year, such as Sun Alliance, Norwich Union Healthcare, RAC and Mercury One-2-One, its management claimed as recently as April that it would make a small but recoverable loss this year.

Outside Coutts, the bulk of the debt rests with trade creditors.

The Osprey Group has stepped in to house the remnants of the agency, which includes ten staff and, most importantly, its main clients Jordans Cereals, Sainsbury SavaCentre and Wolverhampton & Dudley Brewery. Among the ten recruits who will be absorbed into the Osprey Park agency are WMGO agency managing director Steve Greensted and joint creative director Malcolm Gaskin.

WMGO’s other creative director Gerry Moira is understood to be joining a “big agency” – believed to be either Publicis or McCann-Erickson.

“At the moment the plan is to continue as before, only in a more stable environment,” says Osprey Group chairman Jack Rubins. “We are not liable for any of the debt because the agency had already gone into receivership – I had been in touch with the agency for some time, but I speak to a wide range of agencies about deals.

“The fact is that the timing of receivership was decided by the receiver – whether right or wrong. Every supplier knows the dangers of commercial life,” says Rubins.

Touche Ross partner Stephen Akers says: “Any ad agency is a people business and we could not justify it continuing to trade. We approached all the agencies the management had previously spoken to but that did not lead to a deal. Without having the opportunity to get involved at an earlier stage, we did what we could.”

Direct marketing agency Sutch Webster WMGO Direct also moved at the time of the management buyout. Its fate is still uncertain.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here