Mon, 07 Aug 2023 | BUSINESS SALE
A steel fabrication business based in Romsey has been acquired by a connected party in a pre-pack administration process. Wessex Drawing Services, which is based on the Romsey Industrial Estate, was forced to enter administration on July 28 as a result of significant financial difficulties.
The company was founded in 2014 and had reportedly traded strongly before encountering financial challenges that led to its directors injecting a significant amount of personal funds into the firm. It also entered a Company Voluntary Arrangement (CVA) as it sought to continue operating in the face of its financial pressures.
However, the company was then further impacted by Brexit and subsequently the COVID-19 pandemic, leading to further disruption. These pressures, as well as staffing shortages, led to the firm making technical breaches of its CVA earlier this year.
The firm was subsequently presented with a winding-up petition, prompting its directors to engage the support of insolvency practitioners SFP. SFP director David Kemp undertook discussions with the company, which led to the decision to take action to secure the business’ future and maximise returns for creditors, with a pre-pack administration process agreed upon.
The company entered administration on July 28, with a sale of its business and assets to Wessex Welding and Fabrications Limited secured later that day for an undisclosed sum. The deal sees all 24 of the firm’s employees transfer to the new owner under TUPE regulations.
Commenting on the deal, administrator David Kemp said: “While the directors made every attempt to save the business, administration was the only realistic available resolution for the company’s challenges.”
“External pressures have caused many businesses to struggle in recent times, and for any company that finds itself in difficulty we urge them to seek professional guidance at the earliest opportunity to secure the best result for the stakeholders/creditors, the company, and their people.”
In Wessex Drawing Services’ most recent accounts at Companies House, for the year ending March 31 2022, its fixed assets were valued at £70,797 and current assets at £826,194. However, the company owed £1.8 million to its creditors at the time, leaving it with net liabilities of slightly over £990,000.
Read more on the pressures impacting UK manufacturers.
Read more about the impact of new regulations on pre-pack sales to connected parties.
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