Recruitment firm’s MD agrees pre-pack deal
Executive search firm Monocle International was bought for £25,000 in a pre-pack deal by its managing director despite leaving behind debts of £628,000.
The Leeds-based business was purchased by Dan Spurr, despite an £80,000 cash offer being received from a third party one day after the deadline set for offers for the business.
Joint administrators Mike Kienlen and Mark Ranson from Armstrong Watson explained that Spurr and the third party had been invited to return with final offers, and proof of funding before a second deadline on August 11 2019.
They stated: “Despite numerous prompts, the unconnected third party did not submit another offer for the company’s business and assets. Therefore, the final offer made by the purchaser for the sum of £25,000 was the sole offer which was received.”
They added the offer was accepted as it “exceeded the going concern value of the tangible assets” and would secure the employment of all the company’s employees.
And they noted the continuation of the business would provide customers with certainty over completion of work.
But the enlarged business began suffering cashflow pressures in the summer of 2018, with its turnover declining substantially in spring 2019 and a number of the firm’s business development managers resigning.
Administrators from Armstrong Watson were appointed, with a Notice of Administrator’s Proposals report, published on Companies House, explaining: “Subsequent to the filing of the Notice of Intention to Appoint Administrators (NOI), a period of marketing was undertaken to enable a purchase of the company’s business and assets to be sought.
“The Managing Director indicated that he was interested and discussions were entered into with him.
“A pre-packaged sale of the company’s business and assets was concluded on 29 August 2019 to the purchaser. The full balance of £25,000 was payable upon completion.”
The notice states HJ Human Capital Group owed £433,000 to secured creditors – including £252,000 to Yorkshire Bank – and £263,985 to unsecured creditors.
The administrators’ report says it is unlikely there will be enough money to pay off unsecured creditors, while any reimbursements to secured creditors will be “highly dependent on realisations achieved in the Administration.”
A statement provided by Spurr to TheBusinessDesk.com says: “HJ Human Capital Group Limited (the Company) went into administration on 28 August 2019.
“The business and assets of the company were sold to Monocle International Limited on 29 August 2019. The sale of the business secured the employment of the employees and ensured that customers received continuity of service. Following the purchase the business is continuing to trade as normal.”
Armstrong Watson declined to comment further when approached by TheBusinessDesk.com.
