Mon, 28 Aug 2023 | ADMINISTRATION
A car dealership based in the West Midlands has fallen into administration, with a sale process now set to begin. CMS (Kidderminster), which runs a franchised Vauxhall dealership in Churchfields, fell into administration following a period of financial difficulties.
The company had struggled financially over recent months following the qualification of its audited financial statements for the year ending December 31 2021. In the firm’s accounts, submitted to Companies House in April, directors disclosed a stock discrepancy of £3.7 million relating to a stock contra account.
The directors stated: “After several detailed investigations the directors have so far not been able to provide sufficient evidence to support £3,689,292 of stock. The directors are continuing to investigate the stock difference and have engaged with professional advisors in order to determine the appropriate accounting treatment.”
The directors said that they were working to ensure such an issue could not occur again, adding that the firm's 2021 financial statement showed profits before tax of £487,475 and that forecasts and ongoing trading supported this.
While the stock discrepancy did not directly affect the firm’s trading ability during the years in question, it did impact its ability to attract funding and, if required to pay off the stock balance, the company’s liabilities would exceed the value of its total assets by £2.9 million.
As a result, FRP Advisory’s Tony Wright and Rajnesh Mittal were appointed as joint administrators to the firm on August 16 2023. The business will continue to trade, with all 46 members of staff remaining employed, as the joint administrators explore possible options for its future, including a potential sale.
Joint administrator Tony Wright said: "Our appointment provides some stability for CMS and enables the business to continue to trade, supporting both employees and customers.”
"We're working through our options and are considering the prospect of a sale process to protect the future of CMS. We encourage any interested parties to come forward."
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