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Moonfish liquidation

By The Drum | Administrator

August 30, 2007 | 6 min read

Gone Fishing

So, a phoenix will rise from the flames? Good news for some. Bad news, however, for any of the staff that are left in the embers – as well as the agency’s list of creditors.

It has already been speculated that, having registered the Bright Digital ltd name with Companies House, Drewett and Simi could be well underway in the launch of their new venture alluded to in the statement.

Backing up this theory is a series of Flash animations on the moonfish site that allude to “creating a Bright Digital future…” although the pair would not be drawn on the subject.

While the ‘who’, the ‘what’ and the ‘where’ have been established, the ‘why’ had remained a mystery.

Insiders claim that the business was doing relatively well in terms of turnover and performance; despite the usual ebb and flow of staff, employees at the agency seemed happy and, more importantly still, the Moonfish brand was also one that was hugely respected in the industry. So, why the decision to wind the business up?

Well, tracking down the Moonfish directors was no easy task, but, eventually, Simi and Drewett agreed to chat.

Moonfish was formed in 1994 by Kate Drewett and Roberto Simi, who run the agency with commercial director, Larraine Corbelli-Withey.

The two other non-executive shareholders, David Barker and Robert Pinfold, act in a non-operational role, having left the company that they once helped launch.

“The problem goes back to a shareholder agreement which meant all shareholders had to unanimously agree to everything,” said Simi. “We tried to move on, but never managed to resolve this issue.”

Adding to the problem was the fact that two of the founding shareholders – who held 50 percent of the business between them – resigned from the company three years ago following disagreements about strategy.

“More recently, we have had some difficult times, and could not get support from the bank as a result,” continues Simi.

In order to continue, the shareholders would all have had to invest more money but, again, agreement could not be reached.

“It would have been difficult to take on more risk under these circumstances,” added Drewett. “At the end of the day, there would have been no immediate return. In fact, there was not even a definite exit.”

And this, it seems, is the reason why the business could not be sold – in short, there was no confidence that all the current shareholders would agree to any deal.

“I do not want to point any fingers,” says Simi. “At the end of the day it was mutually agreed this was the best course of action. And we did all we could to minimise the impact on creditors.

“We are working on the setting up of a new agency now and will be appointing a small proportion of staff. However, since Moonfish is effectively a liquidation, we will not be affected by TUPE issues [where phoenix companies are obliged to take on the employment responsibilities of the previous firm], but, with the market being what it is at the moment, most of the staff were re-appointed within days.”

It is also thought that the new company being launched by Drewett and Simi is already in talks with Moonfish’s biggest client, Intel.

Other clients handled by the agency, which employed around 30 staff in Manchester and London, also included, Cisco Systems, Fujitsu-Siemens, RNID, Swinton Insurance, Thus and Wyse.

Commentators are, however, quick to point out that this collapse is not a reflection on the current Manchester digital market.

Ray Hanks, economic development advisor to the North West Development Agency, says any struggles are placed firmly on each individual agency’s shoulders: \"I know of no new media company that is currently doing badly as a result of the market itself. If a business is doing badly it is generally down to how that business is being managed.\"

While Moonfish’s most recently posted accounts reveal that it had slipped from significantly positive equity, of over £80,000 in 2004, to a negative equity of £42,625 in 2005 – a downward trend that is thought to have been continued the following year – the company was turning over £1.8m when it closed.

“The only reason you would fold your business is to dump your debt,” says one industry insider. “There comes a point in business where the equation works in favour of simply putting the company into receivership, getting rid of your creditors, and starting again.

“They, no doubt, will have written off any personal investment and made sure their personal assets - such as their houses - were not on the line.

“It is a great pity. Moonfish was very well respected. But new media companies can find it hard to make money, and this failure underlines that fact.

“And obviously such a scenario would have freed them from any expensive commitments such as office leases.”

“The problem with Moonfish is that the business had not moved with the times,” adds another insider.

“When they first set up in 1994 it was okay to say ‘we are a digital business, and we will do all your digital work’. But since then other players - such as traditional marketing services businesses - have entered the fray.

“Moonfish were not particularly creative, were not known for specialisms like media buying or search. What they were, basically, was a good web development company – they delivered the back end. But now there is a mass of teams all chasing that sort of work.”

This is something that the agency had recognised, speculates one source, and it had looked to develop its own bespoke products, but again, it is thought that shareholder issues put a hold on such ideas.

The market for general web development business has been eroded. It is no longer the specialism it once was – a point that Simi concedes: “Companies need to become more specialist; whether that is client based or platform focussed.”

In short, if new media companies are to survive, they either have to develop very strong niche areas - or they need to find a way of expanding their services into other areas of marketing.

This isn’t the only thing that will change now for Drewett and Simi, though: “I will really miss the sense of community,” says Drewett – who is also the chair of CIDS, Manchester’s Creative Industries Development Service, among other industry development roles.

“Over the years we employed 90 people. Most digital agencies have former Moonfish staff working for them. We still know who they all are. It might be nice to have a party to mark the end of this era.”

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