Retail display supplier Axiom suffered a decline in demand in the build up to its administration, which then subsequently saw the company sold in a pre-pack deal.
Rebecca Dacre and Scott Bevan, both of Mazars LLP, were appointed as joint administrators of designer and manufacturer of retail and commercial interiors Axiom Marketing Services Limited on 16 May 2023.
In the build up to its administration, the business suffered a significant sales decline during the Covid-19 pandemic, which then failed to return to pre-pandemic levels as a result of the company’s customers facing financial difficulty.
This then led to a decline in orders due to demand weakening, placing financial issues on the business. Furthermore, supply chain issues impacted the company, which resulted in Q3 and Q4 of 2022/23 planned activity being curtailed or postponed. Coupled with core projects not returning and new customers taking their time to commit to orders, along with pressure from creditors including the HMRC, the business faced being served with a winding up petition.
It was then decided that administration via a pre-pack process would be the best route moving forward. The company was then marketed for sale with five external parties expressing an early interest.
Following the appointment of administrators, the business was sold to Axiom Manufacturing Services Limited, a company under common ownership, on the same date for an estimated sum of £85,450, with £20,000 paid on completion.
The deal also included a 1% of turnover for six months with the estimated consideration for 1% of turnover being £22,450 for forecasted £2.2m turnover. The sale breakdown will see the new owners pay £5,500 plus 1% of turnover from June 2023 to November 2023, with the final payment of £10,000 due in December 2023.
As for creditors, the HMRC is owed £1.2m as a preferential creditor, while 64 unsecured claims totalled £598,000. Administrators said that a distribution is unlikely. Secured creditor, Ultimate Finance Limited, is owed £362,000 and is expected to suffer a shortfall of around £78,000. Overall, creditors are expected to suffer a shortfall of £1.8m.