North-east firm Swinburne & Jackson went under with almost £2.5m of debt and after two failed attempts to sell the business, new documents have revealed.
A statement of administrator’s proposals, published by Companies House last week, says that the firm owed the Lloyds Banking Group £408,000 when it closed last month.
The report states that the bank is a secured creditor, but with insufficient money in the firm to repay the debt, Lloyds will need to resort to ‘pursuing the personal guarantors’ in the firm.
The statement says the firm employed 39 staff who are owed £38,500 in total in unpaid wages, pension contributions and holiday pay.
This is likely to be paid in full, but the £234,000 owed to employees for redundancy and pay in lieu of notice is an unsecured claim and will be subject to a ‘nominal dividend’.
Other unsecured claims include £619,512 to HM Revenue & Customs for unpaid taxes, £515,000 to current and previous members and £541,816 to trade creditors. In total, unsecured claims are estimated at £1.9m.
The statement says the firm, which operated from five offices, was affected in recent years by a ‘significant claim’ against it resulting in increased insurance premiums. A subsequent attempt to introduce new capital and partners was unsuccessful.
In recent months, it continues, ‘constant cashflow problems and frequent late payment of salaries’ has resulted in a number of staff leaving, with further impact on revenues.
The firm’s management made two attempts to sell the business as a going concern in the six months before Tait Walker was appointed as administrator, but these proved to be fruitless.
The most recent financial performance figures show the firm turned over £2.37m in 2012/13, of which £44,438 was recorded as profit before tax. The firm held £125,365 in reserves as of March 2013.
Administrators decided it was not appropriate to continue the business due to ‘a number of issues’ relating to professional indemnity insurance and a lack of working capital.
Since its closure, three deals with separate law firms have been concluded to transfer the majority of live files. The firm’s work in progress as at 3 February this year was estimated at £1.465m.
A further £60,550 has been accrued in unpaid debt, including £42,780 outstanding in administrators’ fees and £9,138 owed to national firm Bond Dickinson in legal fees, following the closure.
A meeting of creditors will be held in Newcastle next Wednesday to discuss achieving the best results for those owed money and to approve pre-appointment administrator fees and costs.