Investors had been told their philatelic (stamp) investments with Gibbons were at ‘negligible’ risk and were offered a guaranteed buyback for the stamps they bought.
Typically, investors spent five-figure sums on a handful of rare stamps. The buy-back guarantee proved popular in the illiquid market.
Ultimately, Stanley Gibbons Group called in the administrators to alleviate the burden of the buyback scheme on its cash flows.
One source close to Gibbons told International Adviser: “The guarantees were a really stupid idea and this outcome was inevitable… as we told Gibbons themselves about six or seven years ago.”
SG Guernsey leaves a trove of £12.6m ($16.7m, €14.1m) worth of stamps on its books against £54m of contingent liabilities relating to the buyback guarantees, £11m of other liabilities and £6.5m owed to the group, which ranks as an unsecured creditor.
Group hires stamp veteran to turn business around
The Stanley Gibbons Group, a coin and stamp dealership established in 1856, is not in administration and is ring-fenced from SG Guernsey.
Announcing the administration process, Gibbons said: “Whilst the board of the company is disappointed that it has not been possible to avoid the administration of SG Guernsey, it has concluded that the administration order serves the wider interests of the company and its shareholders, given that the effect is to ring-fence the group’s exposure to SG Guernsey’s liabilities.”
The group has hired Guy Croton, former head of philately at rival firm Spink, to turn the situation around. It has so far realised £6m from the sale of non-core businesses and assets but estimates only £1m remains to process.
Current trading was described as “subdued”.
