Online beds retailer Sleep Design Ltd, trading as Crazy Price Beds, has been sold out of administration for a sum of £195,000.
The business has been sold to portfolio businesses of Baaj Capital LLP after it entered into administration on 22 November 2022. The transaction was led by Carl Jackson, chief executive, and Richard Easterby, director at Quantuma.
With a business strategy of buying beds and mattresses directly from manufacturers and thus reducing the normal costs passed onto customers, Sleep Design was founded in 2008 and was bought by its existing shareholders in 2014. The company, which imports its beds from China, operates from one site in Cannock and employs 22 people.
The company reported a turnover of £8m in 2021 but, due to global factors, including the pandemic, the rising costs of shipping and materials, and the weakening pound against the dollar, the retailer was unable to sustain trading.
Ahead of entering administration, the retailer accumulated debts of £349,000 to secured creditor HSBC Bank, which is expected to be repaid in full from company cash of £454,000. The HMRC are also owed around £511,000 as a preferential creditor. Administrators said it is anticipated that there will be sufficient funds to pay a distribution, although unsecured creditor claims, totalling £835,000, are not expected to receive any distribution.
Before the sale of the company was completed, administrators received 40 parties expressing an interest, with non-disclosure agreements being sent to 36. Of these, five parties entered into negotiations with a range of offers being tabled from £30,000 to £305,000. The higher offer was seen as the best route forward.
However, upon acceptance of the offer, the prospective purchaser requested additional time to complete their due diligence. This was not an option due to the time-frame of proceedings with the prospective buyer reducing its offer.
Administrators then reverted to the second best offer of £195,000, which had now become the best offer available following the aforementioned reduction. This was accepted with funds paid in full on completion. The sale of the business, to BW Gardening Limited and Book Library Limited, will see the business’ sites continue to operate, and secures all 22 jobs. There is no connection between the purchasing companies and former directors.
Breaking the sale down further, Book Library Limited acquired the goodwill, IP, website and trademarks for a sum of £10,002. BW Gardening Limited acquired the office furniture, plant and machinery, vehicles, customer contracts, vendor’s records, stock and other assets for a sum of £189,998.
Administrators added that the sale was less than the agents in-situ valuation of £426,000 due to stock, where a large amount was incomplete sets of beds that were held for spares and not entire beds that could be sold on to consumers.
Richard Easterby, director, at Quantuma said: “Ongoing global factors and economic uncertainty are continuing to provide challenging trading conditions. We were delighted to assist in the rescue of Sleep Design, and preserve value for creditors.”
