Michael Fortune and Carl Faulds of Portland Business and Financial Solutions were appointed joint administrators of the above company on 22nd January 2016 and we are now able to report on the progress of the administration.
The company was incorporated in 1998 and its principal activity was to provide composting solutions for garden and food waste. Initially sold wormeries through magazine adverts but over the past 5 years it has sold composters, waterbutts and ancillary products. The company sells to garden centres, local authorities, catalogue companies and direct to the public via several of its websites
Over the most recent years the director saw a marked increase in online competition with a number of new entrants 'buying' market share by offering low pricing. Sales were also been affected by the major retailers purchasing large orders and offering discounts. The company began to incur liabilities and with a less than optimistic outlook for the company the director began looking for an orderly exit.
The director had been approached by a company looking to acquire the business and they subsequently made an offer to him for it. It was at this time that the director approached Portland as the offer received was not sufficient enough to clear the company’s liabilities in full.
To better understand the asset position of the company independent chattel agents were instructed to undertake a valuation report for the company on the value of its assets. The agents confirmed that the offer received was in excess of both their ex-situ and in-situ valuations.
The director believed at that time that a disposal of the business assets would likely provide the best solution in the time available. As a competitor in the same field, the purchaser was well placed to absorb the business and ensure continuity.
It seemed clear that the company would have to be placed into an insolvency process at some stage, either before or after a business sale. It was therefore decided that a pre-pack administration approach by taken.
Shortly after our appointment as administrators, we were able to finalise the terms of the offer that we were able to accept after consultation with the secured creditor to obtain the release of the assets from their security.
During the first six months of the administration we have received the consideration from the sale of the business, collected a proportion of the book debts due to the company and recovered a deposit held by the company’s card payment provider.
Creditors can access the progress report here