The listed parent company that owns national firm Simpson Millar is to enter administration.
In an announcement to the London Stock Exchange this morning, Fairpoint Group PLC said it could no longer manage the £1m annual rent for the company’s head office.
But the group gave reassurances about the future of its legal services business, which employs more than 500 people across the UK, following a £5m loan from financiers Doorway Capital Limited last month.
Through that deal, the group’s debt was assigned to Doorway and the lender provided a receivables funding facility to the legal services business.
The Fairpoint statement added: ‘The board believe that this new facility provided by Doorway will enable Simpson Millar and its subsidiaries to continue to trade as going concerns and take advantage of the growth opportunity presented by the size and highly fragmented nature of the consumer legal services market.’
Fairpoint said ongoing support for its other subsidiaries was made more difficult by the ‘onerous’ four-year lease on the group’s head office in Chorley, Lancashire, which involves a £1m commitment every year.
As a result, the board has concluded the holding company of the group, Fairpoint Group PLC, is no longer able to continue trading as a going concern and has filed notice of intention to appoint administrators.
The group suspended share trading in June after being notified by its bank, AIB Group, that it was unwilling to provide the level of ongoing support requested.
Share values plummeted in the last year after profit projections were downgraded and the company’s bosses predicted a turbulent 2017. Hundreds of staff were put on notice of potential redundancy earlier this year when the company announced a reorganisation of the business.
The struggles were a far cry from Fairpoint’s initial entry into the legal services market with the acquisition of Simpson Millar in June 2014, followed by the purchases of personal injury firm Colemans-CTTS and Bristol firm Foster & Partners.