Furniture and carpet wholesaler Design Vintage has been sold in a pre-pack deal after entering administration, saving 16 jobs.
Sean Bucknall and Elias Paourou, both of Quantuma Advisory Limited, were appointed as joint administrators of Design Vintage Limited on 12 April 2024.
Ahead of entering administration, the company, which turned over £1.1m at the time of appointment with losses of £264,000, was impacted by the war in Ukraine, cost-of-living crisis and the rise in interest rates. During this period, trade was supported by unsecured lending and a £50,000 overdraft with NatWest Bank.
This effected profit margins and cash flow and led the company to being unable to meet overheads, including costs of its leased warehouse premises.
At the end of 2023, the company entered into an arrangement with the HMRC on liabilities owed to the sum of £4,000 per month. By February 2024, the business was struggling to keep up with these payments, while also stating that it would not be in the position to fulfil March’s warehouse rent.
It was decided to explore options, with the appointment of administrators the only viable route.
Upon appointment, administrators completed a pre-pack sale of the company’s business and assets to newco Design Vintage Holdings Ltd for a total consideration of £50,000, with £24,000 paid upfront and the remaining balance to be settled over a number of monthly instalments. The director of the insolvent company is also a shareholder of the purchasing business.
On the sale, Administrators said: “There was insufficient working capital and no prospect of persuading new funding to allow medium-term trading to continue in order that the business and assets could be exposed thoroughly to the market.
“The benefits of achieving a pre-packaged sale were the transfer of the employees and the absence of a break in supply of goods and services, which would enable a value to be achieved for goodwill.”
As for creditors, preferential claims from the HMRC totalled over £110,000 and is expected to receive a distribution of 1.9p in the pound. Unsecured creditor claims reached £410,000, including £36,000 owed to its landlord, a further £11,000 owed to the HMRC, £127,000 owed to Funding Circle, £81,000 owed to Shopify and £74,000 owed to NatWest. It is expected that creditors will suffer a total shortfall of £474,000.
