Case Study: Liquidation of outdoor equipment retailer produces better-than-expected returns to creditors
Background
The directors of a company selling outdoor equipment approached Armstrong Watson for advice after experiencing financial problems. The company sold goods from two shops and online. The increase in UK-based tourism during the months of restricted travel due to Covid-19 led to a period of healthy profits.
Following the pandemic, demand tailed off, leaving the company with excess stock. Competition from other retailers meant sales had to be made with reduced profit margins. At the same time, the company experienced an increase in Google costs for selling equipment online.
All these factors adversely affected the viability of the business, and the directors had no alternative but to cease trading and place the company in liquidation.
How we helped
Our Carlisle insolvency team quickly dealt with reservation of title claims from suppliers. Due to inadequate paperwork, a number of claims were successfully opposed. This allowed for a speedy sale of the company’s stock for a higher-than-expected value.
At the same time, Armstrong Watson entered into a dialogue with three different landlords. These leases were all disclaimed, mitigating the claims by these creditors.
Immediate contact with the company’s ex-employees allowed them to make claims to the Redundancy Payments Office for any unpaid wages, holiday pay and redundancy amounts due when the company ceased trading.
Creditors’ claims were speedily agreed and a timely, larger-than-expected distribution was made. It was a satisfactory result for all.
