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.