Major Ecig Firm Collapses
NJoy have filed for bankruptcy with a stated $32-million of debts. Poor trading performance and legislation to blame.
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by Dave Cross
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NJoy give four reasons for the company failing. Firstly, the launch and relaunch of the Kings 2.0 brand was a failure because it was “not accepted by the marketplace”. It accrued increased costs and expenses from developing the King 2.0 product and packaging, and over-extended itself on marketing costs in order to force the brand into the market.
Outside the company, NJoy cite the costs of trying to accommodate government regulation. It says it has “incurred substantial expenses in addressing and preparing for the proposed FDA regulations, and in addressing and complying with the numerous state and local laws.”
Lastly, the company only managed to stay afloat through the use of a revolving credit facility, having operated at a substantial loss every financial year since its inception. In total, NJoy accumulated a deficit of $234.4 million over their operating period!
In an attempt to avoid abject disaster, in January NJoy appointed Barclays Capital Inc. to tout the business for sale to 30 potential purchasers. Not one wanted to take it further than a non-disclosure agreement (NDA). Then, in June, Barclays again approached the twelve companies who had signed an NDA. Five companies signed an agreement to conduct due diligence and examine the books, two went on to carry out substantial due diligence, but no purchase offer resulted.
The company’s fifteen full-time employees face an uncertain future, as do the unsecured creditors. NJoy claim have funds to pay them but also say that they are going to sell off assets in order to raise funds, a statement that rings hollow given Barclays repeated inability to sell the business.
Dave Cross
Journalist at POTVDave is a freelance writer; with articles on music, motorbikes, football, pop-science, vaping and tobacco harm reduction in Sounds, Melody Maker, UBG, AWoL, Bike, When Saturday Comes, Vape News Magazine, and syndicated across the Johnston Press group. He was published in an anthology of “Greatest Football Writing”, but still believes this was a mistake. Dave contributes sketches to comedy shows and used to co-host a radio sketch show. He’s worked with numerous start-ups to develop content for their websites.
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