Founders buy back Bolton hi-fi firm from administrators
A Bolton-based retailer of upmarket hi-fi and audiovisual equipment has been bought back by its founders after being placed into administration following a dramatic fall-off in trade.
The business and assets of VBA Ltd, which traded under a number of brands including Sound and Vision, HiFi Bitz and Digital Direct, have been bought back by a company run by founders Neil Ball and Simon Clarke after it was placed into administration in June.
The company, which operated from a shop and a nearby warehouse in Farnworth, had sold high-end audivisual equipment online and in the year to May 31, 2008 it had achieved a turnover of £55m. It also won a David Ogilvy marketing award for best retail/e-tal strategy for its Christmas 2008 campaign.
However, a report by joint administrators Robert Maxwell and Rob Sadler from the Leeds office of Begbies Traynor states that its turnover dropped dramatically over the next couple of years and in the nine months to February 28 this year sales had slipped to just £11m.
The firm said that it came under pressure from nationwide retailers chipping away at margins and it attempted to move away from low margin, volume internet trading to higher-margin face-to-face sales and opened a second shop in Leeds but sales continued to decline and a number of trade credit insurers withdrweew cover from the business, making it harder to access stock.
At its peak, the firm employed more than 60 staff but it was forced to make a number of redundancies in a bid to cut costs last year and by the time administrators were appointed on June 21 it had just 14 staff.
Administrators agreed to a “pre-pack” sale of the business and assets to Elitemark, a company run by Ball and Clarke, for £150,000 – £50,000 of which was paid upfront – after VBA failed to gain approval from enough of its creditors to complete a Company Voluntary Arrangement.
Joint administrators said that a pre-packaged sale “ensured the best return to creditors as it allowed for continued trading which would not have been posible in any other scenario”.
They added that they would not have been able to trade the business during administration as the firm only had a limited amount of stock and wouldn’t have been able to raise any more cash. This would have led to the firm going out of business and all staff being made redundant.
A statement of affairs compiled by administrators shows that the company had debts of more than £4.8m following its collapse. Following the sale, there was a shortfall to the company’s bank, Barclays, of more than £2m which meant that other creditors owed more than £2.7m by the firm will not receive any money.
