War impacts supply at flooring firm ahead of pre-pack sale

Bespoke flooring and furniture business Oak Artisans experienced wood supply issues due to the Ukraine war as well as a lack of funding in the build up to its administration.

Nicholas Simmonds and Chris Newell, both of Quantuma Advisory, were appointed as joint administrators of Oak Artisans Limited on 3 March 2023.

Ahead of entering administration, the company was severely impacted by Covid-19 restrictions, which saw the enforced closure of its showroom during lockdown. The company found it much harder to win clients and close deals with the showroom playing a critical role of the goodwill and the only source of marketing.

During the pandemic, the company secured a bounce back loan but failed to obtain any additional funding. Post-pandemic, the business tried to trade its way out of mounting issues, but the war in Ukraine created a significant problem.

The oak the company purchased originated from Ukraine, while the plywood was sourced from Russia. There were also widespread increases in pricing of materials as well as interest rate rises, which dampened demand. Directors had no other option but to enter insolvency proceedings.

Following a review, it was decided to place the company into administration via a pre-pack sale as there was insufficient working capital and no prospect of new funding to allow medium-term trading to continue.

The company was sold to Bespoke Flooring of Kensington Limited (BFKL), a newco under common ownership, for a total sum of £45,000 on 3 March, with £10,000 received on completion and the remaining £35,000 to be paid across instalments of £2,500 over a period of 14 months.

The business owed creditors £518,000, with the HMRC owed £295,000 alongside other claims including £119,000 owed in a director’s loan and £50,000 owed to Metro Bank. It is understood that creditors are expected to suffer a shortfall of £447,000.

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