Bespoke kitchen furniture manufacturer The Wood Works has been sold in a pre-pack deal after entering administration, saving 43 jobs.
Jonathan Bass and Freddy Khalastchi, both of Menzies LLP, were appointed as joint administrators of Logobuild Limited, trading as The Wood Works, on 19 February 2024.
Ahead of its administration, the company, which has been established since 1990, saw a reduction on sales during the Covid-19 pandemic period, prompting the business to secure a loan of £160,000 to assist with cash flow and difficulties. Around £80,000 of this amount remains outstanding to date and is secured against a fixed and floating charge held by the lender, Barclays Bank.
By the end of August 2021, turnover rose to £3m, with the company returning to profitability, posting a net profit of £190,000. Due to the success, driven from its new Mill Hill showroom, the business earmarked plans to grow further with the opening of six or seven high street showrooms across the UK.
In early 2022, the company expanded its Letchworth Garden City showroom, while a third showroom was opened in Ascot. During the year ended August 2022, a total investment of £160,000 was made. The new opening boosted turnover to £4.4m for that period and also to £6.1m for the following year. However, with rising costs, profit fell to £44,000 for the latter period.
The company incorporated the same pricing structure across all projects, both small consumer customers to larger commercial clients, which led to cashflow issues due to the small holding deposits being billed upfront on larger long-term projects. This did not cover the overheads of the company. To mitigate the cashflow issues, directors injected £230,000 of further funds.
However, during the second half of 2023, cashflow difficulties continued, and despite another round of additional funding of £150,000, the business was unable to meet payments due to the HMRC and suppliers. Despite agreeing payment plans, by January 2024 the company was unable to pay and the directors had run out of funds.
Following the appointment of administrators, the business and assets were sold in a pre-pack deal to newco The Wood Works of London Limited for a sum of £100,000, with half the amount paid on completion. The further £50,000 is due by 19 May 2024.
The purchasing business was incorporated on 7 February 2024, with no connection to the company in administration or its directors, and is owned by parent company Higham Furniture Holdings Limited, which trades as Higham Furniture.
As for creditors, preferential claims for the HMRC totalled £306,000, while unsecured claims reached £1.3m from 130 creditors. Included in this figure is £570,000 owed to company’s former director. It is expected that creditors will suffer a shortfall of £1.6m.
Administrators said: “In the circumstances, I believe that the sale was in the creditors best interests as a whole, and will achieve one of the objectives of the administration.”
