To all known creditors :
Events Leading up to the Administration
The company had been loss making since 2008 and had experienced a gradual reduction in its margins due to the steadily increasing cost of fuel over the intervening period.
During the early part of 2011, the Company’s former directors, James Dodd and David Pink, entered into discussions with Fredrik Helander to explore the possibility of a sale of the company via its ultimate parent Dodd’s Group Limited (“DGL”) (wholly owned by Messrs Dodd and Pink)
On 18 April 2011 the entire share capital of DGL was acquired by Millmax Limited (“Millmax”), a company wholly owned by Mr Helander. The new owner simultaneously entered into a “sale and leaseback” transaction with both Close Asset Finance and Shilling Mergers Limited, under which it disposed of all the unencumbered chattel assets of the Company for the combined sum of £310,000.
At the same time, the Company entered into a Receivables Finance agreement - factoring of sales invoices - with Leumi ABL (“Leumi”)
More recently the Company began to experience significant creditor pressure as a result of cash flow difficulties. During this period, the director was in discussions with a number of external parties to attempt to raise additional working capita funding to support ongoing trading. By the early part of August 2011, no alternative working capital funding could be found and Leumi became concerned about the financial stability of the business.
On 25 August 2011, as no progress had been made in sourcing additional working capital, Leumi served a demand on the Company for repayment of its facility, with funds in use of £787,038.
The demand remained unsatisfied and the Joint Administrators were subsequently appointed to the Company on 25 August 2011, by Leumi in its capacity as a Qualifying Floating Chargeholder.
The appointment was deemed necessary to protect the position of Leumi and the Company’s creditors in general.
Book Debts
As at the appointment date the Company’s debtor ledger was reported at being £1,638,315
Book Debt realisations to date total £630,068. The collection of the remaining book debts is being conducted by MCR Receivables management Limited (“RM”) and is ongoing.
RM has been engaged directly by Leumi. The extent of further realisations from this source remains uncertain.
Secured Creditors
In consideration of the monies advanced under the Receivables Finance Agreement the Company granted Leumi a mortgage debenture…which confers fixed and floating charges over all assets of the Company.
It is expected that Leumi will be paid in full from the debtor realisations; however, the level of any surplus available to the Company remains uncertain.
Preferential Creditors
The level of preferential claims is currently unknown, but it is expected to be in the region of £100,000, preferential claims will consist of employee’s claims which are mostly subrogated to the Secretary of State, following payment by the Redundancy Payments Office.
Non Preferential Unsecured Creditors
Based upon currently available information, it is anticipated that there will be insufficient asset realisations to enable a distribution to be made.
According to information held in the Company’s books and records, non preferential unsecured creditors totalled £923,893.
This can be summarised as
Trade and Expense Creditors - £711,567
HM Revenue & Customs — VAT - £40,280
HM Revenue & Customs — PAYE - £172,096
Administrators Summary
… a creditors meeting will not be convened as the Joint Administrators believe that the Company will have insufficient property to enable a distribution to be made to non preferential unsecured creditors.
Conclusion.
Leumi will get all its money back
Close Asset Finance paid £310,000 for some assets and leased them back, no further mention is made of them , and they do not appear in the creditor list so can it be assumed they realised enough on the assets to settle the outstanding finance?, more of that later.
Book Debts amount to £1,638,315, collected so far is £630,068, leaving RM (Leumi’s debt collectors) to get the remaining £1,008,247.
An unanswered question is, are Leumi getting this back to clear their £787,038, or has the £630,068 gone the main way to pay this. There could be anywhere between £221,209 or £851,277 washing about depending on the answer to that question, but the former is more likely.
£100,000 goes to preferential creditors, so probably that leaves £121,209, so pretty much nothing when disputed sales invoices, and additional costs and interest are factored in.
The Trade and Expense creditors amount to £711,567, however, the creditor list only amounts to £599,023, is this where the potential Close Asset Finance monies are hiding?, who knows.
So, within 129 days of taking over a 100 year old company with backing from two financial institutions a total of £923,893 has disappeared, watch this space, the new Greek Finance Minister is likely to be a certain Fredrik Helander……
