Creditors of the failed Bross Bagels chain which crashed with debts of almost £1 million will not receive a penny, the official liquidator has confirmed.
Losers in the one-time feted bakery business include up to 140 individuals who invested an average of £1,000 each over two crowdfunding schemes – allegedly to help the business expand.
And while an estimated £150,000 was raised in the so-called “Shareholer” crowdfunding initiatives, disgraced “bagel queen” Larah Bross and her co-owner photographer husband Marc Millar, helped themselves to £61,000 from company accounts in the form of “directors loans”.
The official liquidator Interpath confirmed in its Final Account report, prepared prior to liquidation, that efforts to recover the director’s loans had proved futile.
The report said: “Directors’ Loan Account due of c.£61,000 – despite significant efforts, we have been unable to secure any payment from the directors in relation to this balance.
“We considered various recovery options however, given that there was unlikely to be a return to any class of creditor coupled with the risks of a protracted legal action, these options were not deemed cost effective to pursue. We have therefore closed our file on this matter.”
The biggest loser was UK taxpayers who have been left with a £635,000 tab in outstanding debts due to His Majesty’s Revenue & Customs for unpaid VAT, PAYE and National Insurance contributions.
The Interpath report also confirms that Bross Bagels assets which were sold for £18,000 to Hot Mama Bagels Ltd (HMB) – the phoenix company set up by Larah Bross in a vain attempt to keep Bross Bagels going – had been chronically undervalued.
A £1m hole in the accounts at Bross Bagels – Larah Bross pictured with celebrity supporter Alan Cumming.
Interpath reported: “Investigations into the fair value of these assets subsequently undertaken concluded that this transaction was at undervalue. Accordingly, we pursued HMB seeking a further payment towards the sale of these assets. Unfortunately, HMB was placed into liquidation, by its directors, on 8 August 2024 before we could extract a further payment.”
Selling off assets on the cheap is potentially a serious breach of the Insolvency Act 1986 and could bring sanctions for Bross and Millar, which may include disqualification from holding a directorship for up to 15 years, a fine or lead to a criminal prosecution.
The official liquidator confirmed: “We have complied with the relevant statutory requirements by submitting the online director conduct assessment to the Department for Business, Energy and Industrial Strategy. The contents of our submission are confidential.”
Other creditors due large sums which will remain unpaid include ordinary preferred creditors such as former employees (unpaid wages and holiday pay), unsecured creditors including suppliers (£278,000), and secured creditors Virgin Money who are due around £160,000 in loans and overdraft charges.
Bross turned to dross at St James Quarter.
Founded in August 2017 in Portobello, Bross Bagels built up a cult following supported by quirky marketing and social media campaigns, which culminated in collaborations with Scottish actor and Hollywood star Alan Cumming.
Other units later opened in Leith, Stockbridge and Bruntsfield, followed by the 2021 launch of Bross Deli in a 1,200 sq ft unit in prime site St James Quarter, which proved short lived.
With mounting debts and cash flow issues, the company was placed into liquidation in August 2023 – by which time Bross had already launched a new company, Hot Mama Bagels Ltd in the hope of phoenixing the beleaguered business.
It proved a fruitless exercise with HMB also placed into liquidation in August 2024. The remaining units were forced to close and equipment was auctioned off by liquidators Anderson Anderson Brown. The amount of debt and list of HMB creditors due monies has not been revealed.
Larah Bross – served up huge losses to creditors and crowdfunders.
Stephen Rafferty is a former crime correspondent at The Scotsman and was a staff reporter for the Daily Record and Edinburgh Evening News. He has freelanced for many of the Scottish and UK national newspaper titles. Got a story? Get in touch – [email protected]
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