Pre-pack saves 35 jobs at Droylsden furniture firm

A “PRE-PACK” administration deal to sell the business and assets of Droylsden-based furniture maker Adam Furniture Group back to its management has saved 35 jobs.

The assets have been sold to newly-formed business, The Manchester Furniture Company, which is run by former Adam Furniture Group directors and shareholders Alexander Reynolds and Tracey Hannon.

Adam Furniture Group had been trading in 1973 and its last filed accounts for 2010 show a pre-tax profit of £102,888 on sales of £3.5m.

However, the company hit trouble when it lost a major customer to a competitor during 2010. The customer had been responsible for around 40% of its turnover.

Jason Elliott and Janette Elliott from the Manchester office of accountancy firm Cowgill Holloway were appointed as joint administrators on October 23rd.  Jason Elliott said that the company never managed to replace this lost income and fell into arrears with HMRC.

Although it proposed a “Time To Pay” scheme to reschedule its debts, this was rejected by HMRC Which then issued a winding-up petition against the business, which was due to be heard on November 4.

“That meant the directors had to do something to protect the business, which effectively turned into a pre-packaged administration,” said Elliott.

He said that the company had been marketed anonymously via third-party contacts and that 15-16 competitors had been approached, but no responses were received.

The administrators, who were appointed by Adam Furniture Group’s funders RBS Invoice Finance, therefore agreed the pre-pack as it preserved 35 jobs which would otherwise have been lost if the company had subsequently been liquidated.

“We believe it was a good deal,” he said.