Product quality, staff and cashflow issues all contributed to the collapse of Midlands-based furniture firm Mastrad Contract Furniture ahead of entering administration.

Conrad Beighton and Joph Young, both of Leonard Curtis, were appointed as joint administrators of Mastrad Contract Furniture Limited, a manufacturer and trade supplier of educational contract furniture since 2007, on 7 March 2024.

In the build up to its administration, the business, which had traded profitably until it experienced signs of overtrading during 2023, was impacted by a key member of staff going off sick in the summer – its busiest period of the year.

Other staff left the business during this time too, while quality of stock and products had caused issues with some customers, leading to credit notes, hindering margins and reducing sales.

The company also experienced cashflow problems and relied upon credit cards to assist, but ultimately increased costs relating to interest alongside servicing other long term loan debts.

Furthermore, the company’s largest creditor and supplier had more recently increased pressure on the director to provide repayment proposals for the £160,000 of stock (at cost) that had been supplied in the final quarter of 2023.

The business was not in a position to propose a reasonable repayment plan and following a review it was deemed that it could not continue to trade in the foreseeable future under its structure.

Following the appointment of administrators, the business and assets were sold to Mastrad Furniture Components Limited, under common ownership, in a pre-pack deal worth £35,000, saving five jobs. Upon completion, £17,500 was paid up front with the remaining balance to be paid on deferred terms over three months.

As for creditors, administrators said that it is unlikely unsecured creditors will receive a distribution, with claims totalling £556,000. These included £8,000 owed to the HMRC, £48,000 to financial companies and £541,000 to the trade.

In a statement upon completing the sale of the business, Joint Administrator Conrad Beighton said: “We’re pleased to have played a role in helping a good company that was going through a difficult time.

“Securing the sale of Mastrad Furniture has enabled continuity for all customers and has saved all jobs at the business.”