Koan director bought assets for new venture
THE director of a failed ethical PR agency bought its assets from administrators to set up a new PR company.
Manchester-based Koan was placed into the hands of administrators Kevin Lucas and Andrew Rosler at Ideal Solutions in Bolton with debts of £105,000 in November 2008.
Managing director Elaine Mitchel-Hill bought company assets under her new Stockport-based company Ethical Comms Ltd – including goodwill, intellectual property, fixtures and fittings, the business name and company website – for £8,000 excluding VAT.
The administrators said in their report that the sale ensured “a better result for the company’s creditors as a whole than would be available if the company were wound up, by ensuring a continuity of the business via a sale to Ethical Comms Limited, thereby increasing the chances of realisation of the book debts.”
But the company had a total £104,922 of debt, with £26,300 of that owed to 54 separate trade creditors. A book value of £114,100 of assets is expected to realise £48,000 – leaving £57,000 of debt likely to be unpaid.
The report states that in summer 2008 the company suffered two bad debts amounting to £31,000, which it says “put a significant strain on the cash flow.”
It also lost a significant construction client and saw a sharp decline in sales, which meant it could not meet the demands of its creditors.
The company had a turnover of £757,560 for the year to the end of March 2008.
Two staff were made redundant, but the remaining three moved with Ms Mitchel-Hill to her new venture, which also trades on ethical credentials.
Ms Mitchel-Hill was criticised by others in the industry for collecting an award at the North West PR awards, when she knew Koan would be filing for administration less than 48 hours later.
