PKF investigates collapse of Cresta Furniture

ADMINISTRATORS are investigating the financial circumstances which led to the collapse of a Lancashire furniture firm and the role two of its previous directors played in it.

More than 100 customers were left out of pocket when Preston-based Cresta Furniture was placed in administration in February and six staff lost their jobs.

Manchester-based administrator PKF has now asked IT specialists to examine the server of a computer.

The computer – which had been initially removed along with stock – had previously been found to have had its financial data removed.

PKF is also investigating the roles of the company’s directors David Topping and his stepson George Topping.

The pair remained actively involved in the daily running of the company despite having resigned their directorships in June 2008 when Cresta Furniture’s sole director became Paul Vella who is based in Malta.

Mr Vella is described in a statement of administrators’ proposals to have had “little or no involvement in the management of the business and was merely a director of convenience”.

Cresta Furniture, which specialised in leather goods, ran into problems after a long-running legal  dispute with Italian manufacturer Natuzzi.

The report states: “From the limited financial information available it would appear that the company had traded profitably for many years, but more recently, it performed less well.

“In mid 2009 the company brought a price fixing claim against one of its principal suppliers Natuzzi Spa.

“Cresta continued to pursue this claim until late 2009 when an adverse costs order was obtained against the company by Natuzzi.

“Cresta could not afford to pay these costs nor could it continue to fund its own ongoing legal costs.

“On February 5, 2010, another furniture supplier, Incanto, apparently attended Cresta’s showroom premises and removed goods which they had allegedly supplied as a result of the non payment of an outstanding invoice.

“We are advised that the company’s employees were sent home by George Topping following this incident and the showroom was closed.”

When the administrators gained access to the company’s showroom, an inspection led to suspicion that showroom stock, paper records and the computer systems had been removed from the premises.

The report adds: “This suspicion later proved to be correct. A substantial investigation has been undertaken to date and certain matters have already been reported to the appropriate authorities.”

Cresta Furniture is understood to owe HSBC around £750,000, Her Majesty’s Revenue and Customs £81,507 and its employees around £2,000.

The administrators are now trying to recover money from the company for its creditors and are offering a 69 year lease on its showroom in Ribbleton Lane for £400,000.

Cresta Furniture also owned two plots of development land in Churchtown which the administrators are  attempting to have accurately valued. It is also expected to recover £15,000 from the sale of recovered stock.

George and David Topping are also understood to owe the company £431,324 – a figure which the pair dispute and have now put in the hands of their lawyer.

The administrators have a statutory duty to investigate the conduct of directors and to prepare a report for the Insolvency Service.