Revealing an estimated shortfall to unsecured creditors of £839,000 – including £232,642 in CBILS loans and an overdraft with Lloyds Bank – on the administrators’ notice of proposals, signed 3 April, Mark Hodgett and David Willis of FRP Advisory’s Leeds branch explained that a pre-pack sale was deemed the best option for UKPC’s creditors and staff.
Book debt collections at UKPC are still ongoing, with FRP hoping to cover the £166,000 shortfall from UKPC’s confidential invoice discount facility with business bank Bibby with the money raised.
UKPC’s downfall originated in cashflow issues. Covid “significantly impacted” the firm, according to the administrators, and with two CBILS loans from Close Brothers and Lloyds, UKPC was put in further difficulties thanks to a continued downturn in trade and repayments coming due.
The firm had made strong efforts towards recovery over 2021 and 2022, growing its turnover from £1.1m in the year to September 2021 to £2m in 2022.
Gross profit likewise jumped from £374,000 to £610,000 – but after administrative expenses and interest coming due from loans, pre-tax profit dropped from £87,000 to a loss of £1,000.
UKPC’s cashflow was then tightened further in 2023 and 2024, with the operation suffering a bad debt of £30,000. Unable to pay suppliers on time, UKPC had to start making payments pro forma and struggled to fulfil the orders on its books.
Realising that the firm would need a significant cash injection over the next year, but unwilling to provide a personal guarantee to support additional lending, the administrators said that UKPC director and majority shareholder Adam Robinson no longer considered the business viable in its current form.
Approaching FRP on 26 February, Robinson then asked the business advisory to run an accelerated marketing of UKPC for sale as a going concern.
Deciding that a pre-pack would be of most benefit to UKPC, its creditors, and the 26 staff at the firm, Robinson instructed FRP to try to secure a sale immediately after going into administration.
A notice of intention to appoint administrators was filed on 14 March, and FRP then liaised with a number of potential bidders. During the marketing process, 19 non-disclosure agreements were signed, with four parties going on to express interest, including two trade parties, a private equity firm specialising in distressed businesses, and UKPC’s existing management, who would form S43, UKPC’s eventual buyer.
The firm's assets not subject to finance were valued at £64,000 in situ, or just £20,600 ex situ; S43 made an initial offer of £34,000.
After negotiating that price up to £50,000 (including £15,000 for stock), FRP accepted the offer, with half made in advance, and half to be paid in instalments over the next six months.
Robinson owns 60% of S43, with colleagues Nick Woolhouse and Michael Beahan owning 20% each.
Neither Lloyds Bank nor Lloyds Bank Commercial Finance will be providing funding to S43, though the administrators reported that Bibby will.
UKPC and Adam Robinson had not commented at the time of writing.
