The nationwide insolvency practitioners, SFP, has been appointed Administrators to Weston-Super-Mare-based electronic manufacturing company, Marsden Smith Limited (MS), after it accrued substantial debts with a sum owed to Her Majesty’s Revenue and Customs (HMRC).
Established in 2007, MS specialises in PCB assembly, PCB manufacture and electronic assembly for a spectrum of companies including defence, gaming, education and medical industries. The company has 15 employees and an annual turnover of circa £1 million.
In light of the company’s steady increase in trade, it moved premises in 2008 to a larger unit. Further, at around this time the company suffered a number of large bad debts.
Notwithstanding the above, it is understood that the company’s turnover continued to increase and in 2010, it peaked at circa £2.4 million per annum.
In 2011, however, the company’s trade declined as a result of the general economic downturn. Specifically, certain clients in the public sector had their budgets reduced due to austerity measures. As a result turnover reduced to circa £1.8 million per annum.
In 2012, the company was successful in winning a fixed price contract, however the company’s supply costs subsequently increased, leading to a reduction in profit margin and a further strain on cash flow.
As a result one of the owners sought advice from his accountant and the company was subsequently referred to a firm of insolvency professionals, FRP.
Following a consultation, the company proposed a CVA to its creditors. This was approved on 29th April 2013. Payments were subsequently made in line with the terms of the agreement.
Cash flow difficulties persisted and the company was unable to invest in additional levels of staffing to enable it to take on additional work. Further, the company was unable to benefit from lower supply costs from alternative suppliers as credit terms could not be obtained. This effectively meant that the terms of the CVA could not be adhered to and that post CVA liabilities could not be serviced.
In the light of the above, Mr Smith sought further advice from SFP. SFP’s Simon Plant and Daniel Plant – both licensed members of the Insolvency Practitioners’ Association – were appointed Joint Administrators on 31st October 2013.
A meeting was then held between a director of SFP and the owner. During this meeting, he advised that the company was experiencing significant creditor pressure.
Following negotiations with a number of interested parties, an offer was made by Virtuose that was rejected, but a subsequent final offer was approved and the business and assets were sold as a going concern.
Simon Plant, Director at SFP says the business was no longer able to maintain its Company Voluntary Arrangement and exacerbated cash flow problems led to its appointment as Administrators:
“The electronic manufacturing industry has been hit hard by the economic downturn and this has caused the failure of Marsden Smith Limited. Following a brief marketing campaign, a sale of the business and assets has now been concluded, saving jobs and enhancing realisations for the Administration estate.”