Sherry firm hit by administration and fraud claims

The collapse has also seen most of the remaining staff take a 20% pay cut with reduced hours, while there has been a further knock on effect for the 10,000 employees of the Nueva Rumasa group.

A source close to Jerez confirmed that ¡°the Ru¨ªz-Mateos family have been removed from management¡±, with all payment and supply contracts to be conducted through the administrators.

The focus is understood to be on paying off Nueva Rumasa¡¯s current debts, with the aim of keeping the business going, while outstanding payments are understood to be ¡°under negotiation¡±.

The source assured the drinks business that the four bodegas within the group, Garvey, Valdivia, Zoilo Ruiz-Mateos and Teresa Rivero, ¡°continue to operate on a normal basis.¡±

Among the family members understood to be involved in the fraud investigation is Alfonso Ru¨ªz-Mateos, husband of the British honorary consul Alejandra Cruz-Conde Lleo.

Ten companies within the Nueva Rumasa group entered bankruptcy protection in February, a move which allowed it four months to negotiate a payment plan with creditors.

At the time, the head of the family, Jos¨¦ Mar¨ªa Ru¨ªz-Mateos, revealed that the combined debt of the companies amounted to  €700 million, assuring employees and investors that ¡°no lay-offs are planned¡±.

In March both Ru¨ªz-Mateos and his son were summoned to court for questioning as part of an investigation.

Only last year, Garvey was defending its role as whistle blower in a Sherry cartel scandal, with its then regional manager Tim Holt claiming that new regulations on production were ¡°trying to squeeze us out in favour of Fedejerez bodegas.¡± Holt has since moved to become area director at Bodegas Barbadillo.