How a bike firm collapsed just a year after a £30m MBO

Derby-based bike distributor and retailer Moore Large collapsed owing over £20m just a year after a £30m management buy-out after its supply chain was disrupted and the firm fell foul of falling demand brought on by rising inflation.

Scores of jobs were lost when administrators from FRP Advisory were brought into the company in March.

The £41m company stocked bike brands such as Forme and Lake. It traded out of a 215,000 sq foot warehouse and office facility in Sinfin, and was a major importer and wholesaler of bicycles, accessories, cycle clothing and components.

Its MBO was backed by HSBC, a secured creditor, which was owed £10.6m, when Moore Large went under.

New documents seen by TheBusinessDesk.com show that, during the pandemic, bosses at Moore Large continued to place orders with suppliers based on increasing trade volumes and extended lead times (of up to two years).

Despite cancelling some of these orders in order to mitigate for reduced demand post-pandemic, the company became overstocked, which ate into its working capital.

This led Moore Large being introduced to FRP at the end of September 2009 so that it could undertake a review of the company’s short- and long-term cash flow forecasts.

Moore Large’s secured creditors said they were unable to put any more cash into the business and so FRP was instructed to find a buyer for the company on 30 November last year. However, marketing of the firm was carried out on a restricted timetable due to lack of working capital and creditor pressure.

Following an aborted sale, a vehicle associated with the directors came forward and agreed to buy Moore Large in a pre-pack deal. However, this also fell through after their backers withdrew their funding.

The majority of the 103 staff were made redundant with 26 retained to assist in winding-down operations.

The administrators say that HSBC will “suffer a significant shortfall” on what it is owed, while unsecured creditors, who are owed almost £5.5m are unlikely to see any of the cash owed to them.