Handmade upholstered furniture manufacturer Roche Designs Limited was sold in a pre-pack deal for £25,000 after entering administration.
Rochelle Schofield and Mike Dillon, both of Leonard Curtis, were appointed as joint administrators of Manchester-based Roche Designs Limited on 8 March 2023.
Ahead of its administration, the company suffered a decline in orders as a result of the Covid-19 pandemic which impacted its cash flow, alongside increasing overheads. Furthermore, during 2022 the director was away from the business for family reasons, which also impacted performance.
Roche Designs reported a turnover of £486,000 in the year ended 30 April 2022, although losses stood at £70,000, significantly worse than its profit of £3,000 recorded the previous year.
As a result of the decline in performance, the company fell into arrears with the HMRC, owing £82,000. An agreement was put in place to repay the balance outstanding over a period of 32 months. However, the business failed to maintain the monthly payments of £1,000.
The HMRC then visited the premises of the company and indicated it may pursue an attachment of assets order it a new agreement or repayment was not agreed. It was at this point advice was sought by the business and it was deemed that it had no alternative other than to consider a formal insolvency process.
A sale process was considered as the best route to take, with the business marketed for sale from 22 February to 28 February 2023. A total of six unconnected parties expressed an interest alongside one from a connected party. However, no offers were received from the unconnected parties, leaving connected party – and purchaser – Chesterfield Couture England Ltd to table an offer of £25,000. This was accepted and saved 10 jobs.
The sale included £20,000 for the business, assets and trade debtors, as well as £5,000 for the inter-company debtor. The sum of £20,000 is to be broken down and paid across nine instalments, with the first being £4,000 that was paid on completion. The further eight payments are for £2,000 a month until November 2023. As for the £5,000 inter-company settlement, £1,000 was paid on completion, with a further £500 to also be paid monthly until November this year.
As for creditors, administrators said it is anticipated that there will not be any distributions made with unsecured creditors totalling combined claims valuing £235,000. These included the HMRC, owed £32,000 (alongside a preferential claim of £25,000), Lloyds Bank – owed £65,000, Funding Circle – owed £51,000 and trade claims valuing £78,000. It is expected that creditors will suffer a shortfall of £260,000.
