Furniture manufacturer All Sofas has been saved from administration after securing a pre-pack deal to newco Fina Furniture.
Ahead of the administration, trading issues began to arise with the onset of the Covid-19 pandemic and the restrictions imposed meant trading was halted from March 2020. A significant number of orders were cancelled or delayed as a result, while more recently the company has seen costs of importing supplies of product increase substantially, which were not passed on to customers.
Furthermore, there were also issues with attracting and retaining skilled workers, and inflationary pressures generally have impacted on the viability of operations.
The business delivered a turnover of £1.3m in the year to September 2020, which increased to £1.8m in 2021. Pre-tax profits resulted at £67,000 and £64,000 respectively. For September 2022, sales fell to £1.6m, while losses amounted to £245,000.
The company was unable to pay its debts and made the decision to call in administrators as it was no longer able to continue to trade. Brett Barton, of BLB Advisory, was appointed as administrator of All Sofas Ltd on 11 November 2022.
Following the appointment, the company’s business and certain assets were sold to Fina Furniture Ltd, a newco owned by the same director Anna Lundgren, for a sum of 50,000.
It is understood that secured creditor Just Cash Flow plc, owed just over £20,000, has been settled following the purchase, while other claims, including £173,000 from the HMRC and unsecured creditors will suffer a total shortfall of almost £300,000.
Anna Lundgren, Director at Fina Furniture Limited, said: “Over the past year we have seen the price that we pay for wood from Europe soar from £12.75 to £32, which is one example of the challenge that we have been facing among other higher costs such as rising energy bills, not to mention the consumer impact of the cost-of-living crisis.
“We were in a position where we could not keep passing on the price increases to our customers, so after seeking professional advice we have undergone a pre-pack administration, which will enable us to continue to operate and safeguards the jobs of our loyal employees.
“We are now in a position where we are mapping out a slow and steady plan for growth over the coming years, as we aim to build on last year’s turnover of £1.3 million.”
Brett Barton, Director at BLB Advisory, worked closely with Anna to finalise a rescue deal for her business. Brett added: “All Sofas Limited, now known as Fina Furniture Limited, has a track record of being a viable business, but like so many companies, they are facing multiple rising costs amid a cost-of-living crisis, and are in need of some support.
“This pre-pack administration has struck the right balance between enabling the business to continue trading without any operational disruption to employees, customers and suppliers, whilst providing the best possible outcome for creditors.
“It’s a good example of how seeking professional advice early can be the difference between survival, safeguarding many jobs, and a business going completely under.”
