Car dealership with unexplained stock discrepancy appoints administrators

A car dealership in Kidderminster has appointed administrators, a move which comes days after an unexplained stock discrepancy of almost £3.7m was discovered.

Tony Wright and Rajnesh Mittal of specialist business advisory firm FRP have been appointed as joint administrators to CMS (Kidderminster) Limited.

All 46 staff remain employed and CMS continues to trade as the administrators explore options for the future of the business, including the possibility of a sale.

CMS operates a franchised Vauxhall dealership in Churchfields. The business has faced financial difficulties in recent months following the filing of its accounts and the qualification of its FYE 31 December 2021 Audited Financial Statements, which impacted its ability to secure funding and led to the appointment.

Tony Wright, partner at FRP, said: “Our appointment provides some stability for CMS and enables the business to continue to trade, supporting both employees and customers. We’re working through our options and are considering the prospect of a sale process to protect the future of CMS. We encourage any interested parties to come forward.”

In its accounts ending December 31 2021, the firm’s directors discovered an unexplained discrepancy of £3,689,292, in relation to a stock contra account.

After “several detailed investigations”, the directors were unable to provide sufficient evidence to support the stock.

But the error did not impact trading ability, as the group saw a profit of £368,899 for 2021.

The firm also struggled throughout the Covid-19 pandemic, with a reduction in employees to 79, a lack of skilled trained people to employ and a global parts shortage.