A decline in sales, HMRC arrears and a CVA at one of its key raw material suppliers were the main issues leading up to the administration of Axminster Carpets.
Duff & Phelps was appointed as administrators on 19 February 2020, impacting 80 jobs, and was subsequently sold to ACL Carpets – a group of private investors including some of its former owners and the Dutfield family, which had controlled the company until 2016.
Detailed in a new report from administrators, the carpet manufacturer reported pre-tax losses of £273,000 for the year ending February 2019 and further losses of £499,000 for the 10 months to December 2109 ahead of its administration.
Following their appointment, administrators sold the underlay business, Axfelt, to Ulster for a sum of £400,000, while also agreeing a sale of The Factory Outlet Shop to Factory Outlet for a sum of £25,000.
The Axminster business was sold to ACL Carpets for a total sum of £333,500, with the deal also including the change of name to Axminster Carpets Limited, which was changed on 18 March.
In regards to Wilton Looms, ACL Carpets has entered into a short term lease agreement for a period of nine months for a fee of £25,000 and monthly sums of £2,700, with an option to purchase for a price of £350,000, plus an exit fee of £50,000. This can be activated at any point during the nine months before expiry, while administrators have confirmed that if a higher bidder comes in, it has the right to cancel the lease and sell the asset.
Upon appointment of administrators, the company had book debts to a value of £731,000, of which £500,000 is expected to be recovered.
Secured creditors include £1.3m owed to IGF, which is expected to receive some repayment but is unlikely to repaid in full, while wool supplier H Dawson, which acquired a controlling stake back in 2016, and Robert Day are owed sums of £6m and £750,000 respectively, and are expected to suffer a complete shortfall, along with preferential creditor claims of £23,000 owed to employees.
Unsecured creditors are owed a combined figure of £1.7m, with trade and expense claims valuing £1.2m. The HMRC is owed £543,000, while other employee claims totalled £16,000. It is understood that creditors will suffer a shortfall of the entire amount.
This is the second time the company has gone into administration in seven years, and following the sale it will continue to operate from its head office and manufacturing facility in Axminster.