EOS struggled after RBS pulled support
MANCHESTER law firm EOS Law saw revenues increase in its first two years of trading but struggled to cover costs and lost the support of its bank.
The business, set up by Simon Woolley a former managing partner at DLA Piper in Manchester, went into administration in early December, two-and-a-half years after it began trading.
According to a creditors’ report by administrators BDO the firm recorded year-on-year turnover and profit growth but was not making enough money to pay its eight fixed share partners.
In the year to April 2012 it made profits – after tax but before members’ remuneration – of £124,000 on turnover of £1.12m. The following year this increased to £439,000 on revenue of £1.77m.
After trading for six months Mr Woolley sought to raise extra working capital finance from his lender, NatWest, a division of the Royal Bank of Scotland, but this was refused after the bank decided to reduce its exposure to the legal market. The bank later refused to refinance its £250,000 four-year loan with a £250,000 overdraft and said it wanted this to be repaid at the renewal date.
Instead EOS secured a loan from a company connected to Mr Woolley called Marchdale, and raised £290,000 from investors through loan note finance. Mr Woolley also put in cash but was unable to save the business despite merger talks with two larger firms, not named in the report.
A statement of affairs shows his personal loans totalled £214,000 and Marchdale was left with an exposure of £464,000. HM Revenue & Customs is owed £470,000 and the bank has been left with an exposure of £279,989.
The firm failed with debts of £2.3m and has assets of around £145,000, which includes revenue from the sale of work in progress. Law firm Ward Hadaway paid £83,000 for a large part of the work, while corporate lawyer Kevin Philbin paid £10,000.
