Post pandemic struggles see kitchen business fold

Kitchen furniture manufacturer Custom Design struggled to trade its way out of the pandemic that led to its eventual collapse.

Dave Clark and Phil Clark, both of Clark Business Recovery Limited, were appointed as joint administrators of Custom Design B.A. Limited on 8 January 2024.

In the build up to its administration, the business suffered from the impact in relation to the Covid-19 pandemic, and while sales had increased following a return to trading after the enforced lockdown, material costs had dramatically risen, putting pressure on margins.

Further issues were also encountered through its supply chain not being able to deliver materials needed, while a reduction in custom due to the cost-of-living crisis impacted performance.

During November 2023, the company acknowledged it did not have sufficient future orders to allow the continuation of trading alongside paying its ongoing liabilities. After a review, either an uptick in custom or injection of working capital was needed. However, after further review, it was decided that the company cease to trade due to its position.

Upon appointment, administrators had the initial view to rescue the business via a sale, however, the directors were “not interested” in acquiring the assets to continue to the business under a pre-pack.

The business owed preferential creditor employee claims almost £20,000, which is expected to be repaid from realised assets valuing £76,000. The HMRC is also owed £19,000 and is expected to repaid in full. As for unsecured creditor claims, these totalled £377,000, with £184,000 owed to employees. It is expected that creditors will suffer a shortfall of £340,000.

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