We have recently passed the six month period since the date of our appointment. The joint administrators, James Tickell and Carl Faulds are therefore providing creditors with an update on the progress of the administration.
You may recall that we were appointed joint administrators of the company on 17th March 2015. The company had traded successfully for a number of years as a bus operator in Cornwall. The company began to suffer from cash flow difficulties in 2013. Those issues continued into 2014 and later that year, the company’s management sought a sale of the business and marketed it for sale. A sale of the business was completed in December 2014. In February and March 2015, the new owner encountered issues with the company’s insurers which eventually lead to the company not being in a position to meet the insurance premium and as a consequence the company was forced to cease trading on 13th March 2015.
The company’s principal assets were its freehold trading premises in Newquay, Cornwall and its fleet of buses. We instructed agents to market the property, buses and chattel assets. Following a large amount of interest a number of offers for the property were received. The highest offer was duly accepted and a sale completed on 21st July 2015. The offer for the property also included the purchase of the company’s workshop and office equipment.
We have also been successful in achieving a sale of the company’s bus fleet and chattel assets, which included one vehicle subject to finance.
In addition there have been realisations in respect of cash balances, debts due from former employees, funds held by the company’s merchant services and fuel card providers and the Green Travel Pass Scheme which was operated in conjunction with another local bus company.
We are pleased to report that the total asset realisations exceed the originally estimates reported in the administrators’ proposals.
As reported in our proposals, following the sale of the business in December 2014, the former directors and shareholders were granted a fixed charge over the freehold property in respect of outstanding balances on their directors’ loan accounts. Due to the period of time between the granting of the charge and the company’s subsequent insolvency, there is potential for the charge to be challenged as a preference under section 239 of the Insolvency Act 1986. We have been taking legal advice on the matter and we have reviewed the company’s records including files containing documentation relating to the sale of the business in December 2014. We have recently met with the charge holders and their solicitor to discuss the matter. We have reached an agreement in principle to settle the matter, however the agreement is subject to contract and consequently not yet finalised, so we cannot disclose the detail at this stage.
At this juncture it is uncertain whether there will be funds available for the preferential or unsecured creditors. In the event that funds are available we will look to convert the administration to creditors’ voluntary liquidation in due course.
For further details please read the full administrators’ progress report which can be access here