Upholstery manufacturer Vale Upholstery Limited was placed into administration following a decline in demand and suffering the strain of competing with foreign imports.
Phil Clark and Dave Clark, both of Clark Business Recovery, were appointed as joint administrators of Vale Upholstery Limited on 1 August 2022.
Detailed in newly filed documents on Companies House, administrators said that prior to its collapse, the company continued to trade successful and saw an unbroken stretch of 75 years in production, building a strong reputation for manufacturing high quality upholstery.
However, in recent years the business saw a significant decline in the number of stockists operating within the UK, while the influx of imported furniture products from China and other countries had resulted in reduced demand.
Following the Covid-19 pandemic, the company saw demand decline further, leading the business to cut overheads by reducing staff numbers and implementing temporary pay cuts to remaining employees.
Despite the steps taken, turnover has not recovered sufficiently in recent months, which resulted in the company being in a position where it could no longer trade without additional finance, and therefore entered administration.
Following the appointment, administrators received an offer of £150,000 for the entire business from Maramar Holdings Limited, an associated company of Vale Upholstery’s landlord.
The deal included the brand, designs and IP of the business, with the latter causing a potential issue due to the IP ownership being transferred to an associated company, VB Properties HX Limited – formerly known as Vale Bridgecraft Limited – in 2020 for no sum.
The parties agreed a sale of £150,000 with £75,000 paid on completion and that Vale Bridgecraft would receive 50% of the sale price over £75,000. The remaining balance will be paid over a period of 10 months.
As for creditors, documents outlined that the HMRC is owed £95,000, while trade creditors are owed a combined figure of £164,000. Consumer claims totalled £102,000 and landlord claims stood at £21,000. Associated company debt is £210,000 with 53 employee unsecured claims reaching almost £240,000. It is understood that creditors will suffer a shortfall of £861,000.