The assets of upholstery and furnishing fabrics business Blendworth International Limited were sold for £100,000 after it was placed into administration.
Jeremy Woodside and Frank Ofonagoro, both of Quantuma Advisory, were appointed as joint administrators of Blendworth International Limited and Blendworth Holdings Limited on 1 December 2022.
Upon appointment, administrators made its 19 employees redundant and conducted a marketing process to sell the business and assets, either as a whole or on a piece meal basis.
Back then, Blendworth’s website listed two newco’s, Blendworth Bespoke Interiors Limited and Blendworth Interiors Limited, as owners, both of which were incorporated during December 2022.
However, there was no confirmation on any asset sale at the initial reporting stage. Detailed in a new administrators progress report, the sale of the business assets was completed to Blendworth Interiors Limited for a sum of £100,000, which included £75,000 for stock.
The breakdown of the fee also saw £19,997 for IP, £3 for goodwill, records and customer contracts, as well as £5,000 for equipment. An initial payment of £25,000 was paid on completion, followed by 10 monthly payments of £7,500 plus VAT. The purchaser also provided security over their house, limited to £25,000, if a default in payments occurred.
At the date of the updated report, administrators have received £20,833 – a shortfall of £4,167 outstanding, while a further three scheduled payments of £7,500 have been also been missed.
“The purchaser has raised various queries regarding the value of the assets following the sale (mainly relating to additional removal costs and alleged damage to stock), and discussions in this regard remain ongoing,” administrators said.
“We are reviewing these claims with the assistance of their agents. However, based on current information we do not believe there is any merit in these claims and will to enforce their security should payment not be forthcoming.”
Ahead of entering administration, the Rochdale-based business had secured a Personal Protective Equipment (PPE) order to supply equipment to the NHS during the Covid-19 pandemic. This contract was won back in May 2020 and allowed the business to continue to trade, maintaining turnover of c.£2m.
Due to demand, the company secured additional contracts of similar nature to produce PPE for over five years. In order to meet this demand, the business invested significantly in new machinery and tooling, financed with third party lenders, while in addition, during February 2021, entering into an invoice finance agreement with Ultimate. Further funding was also secured via a CBILS loan.
During September 2021, the business started to trade again with its usual fabric orders while also continuing with PPE production. However, a month later, the PPE contract was terminated earlier than expected. The business was beginning to be impacted by loan repayments following the investment, coupled with declining demand of fabric production for the level of machinery in operation.
In February 2022, Blendworth did secure a contract to produce products for the Military of Defence (MOD) but encountered several issues and disputes on payment terms. These issues subsequently affected the fabric production side of the business as the company struggled to pay for supplies. By late 2022, the company’s working capital facility was overpaid and no further funding was available with no other option than to enter administration.
Turnover fell to £1.2m for the period from 31 December 2021 to 31 May 2022, while EBIT dropped to a loss of £65,000 from profits that once stood at over £200,000.
As for creditors, administrators have now confirmed that secured creditors, which include Amicus – owed £881,000, Ultimate – owed £407,000, and Cyan Finance – owed £175,000, will not be repaid in full. As for preferential claims, which include employees and the HMRC, understood to be around £459,000, are likely to receive no distribution.
With regards to unsecured creditors, claims are now estimated to be around £1.5m, with 44 claims valuing £956,0000 already received. These creditors are expected to suffer a shortfall of the entire amounts owed.
