14 DAY TRIAL // Luxury phone manufacturer Vertu is once again struggling to deal with its finances, as the company can’t even pay its bills and owes millions of dollars to partners, suppliers, and service providers.
Since the demand for super-expensive smartphones that lag behind in terms of functionality as compared to flagships launched by Samsung or Apple has obviously collapsed, Vertu was passed from one owner to another after Finish manufacturer Nokia decided to give up on it.
Vertu was eventually purchased by a Chinese investment firm in 2015, but the company ended up being owned by Turkish businessman Hakan Uzan in March this year.
But this doesn’t necessarily mean that Vertu has returned to growth. Right now, the company is said to owe no less than $3.2 million to Microsoft, as the software giant is the lease owner of Vertu’s headquarters. Furthermore, property service provider CBRE needs to be paid $540,000, while approximately 200 employees haven’t been paid in a long time.
Obviously, this can’t go on forever, as suppliers are already threatening to stop providing services to Vertu. CBRE, for example, said that it would no longer provide cleaning services and stop collecting trash unless being paid as soon as possible.
Current owner accused of illegally holding shares
And Vertu’s struggle does not end here. Previous owner, a Hong Kong hedge fund manager called Mr. Chen, accuses Uzan of not transferring the money for the takeover and only providing a “screenshot” of the bank payment after agreeing to purchase the company.
“The bank did not receive the transfer from Mr. Uzan. I still have not yet received any payment from Mr. Uzan,” the Chinese manager was quoted as saying.
The hedge fund manager says he’s ready to sue and ask for what he calls “huge compensation.” As a response, lawyers appointed by the Turkish businessman said Uzan is the legal owner of Vertu, agreeing to assume debts of more than $32 million to bring the company back to success.
“Since then, the new owner has examined the company’s finance, contracts and relationships and has been shocked to discover that many suppliers have not been paid for a year and a half and was concerned to discover that staff-related payments had not been made regularly,” the lawyers said.
“The new owners have instructed lawyers to pursue Mr Chen through the Chinese courts in respect of unlawful use of company assets. Since the business changed hands, all staff payments have been made, and staff are due to be paid at the end of this month as happens normally.”
The dispute is very likely to be moved to court very soon, though for the time being the two sides are only threatening each other with legal action.