STP’s collapse revealed
COLLAPSED stair and door manufacturer STP was dealt a knock-out blow by the decision of a major credit insurer to withdraw its cover, it has been revealed
With suppliers unwilling to provide goods without payment STP needed £1m to £2m to keep trading, according to a report by administrators at Ernst & Young.
The business’s backers and shareholders decided not to fund this deficit and the business collapsed with debts of at least £8m in September.
Some £4.6m was owed to unsecured creditors who are not expected to receive anything.
Its secured creditors include GE Commercial Finance which had provided £2.5m of invoice finance and
Endless, the Leeds-based turnaround specialist Endless which bought the business in November 2007 for £6.4m, is owed £890,000.
STP operated from premises in Manchester, Yorkshire, Derbyshire and Bristol had two divisions – manufacturing and distribution. Manufacturing took place in Derbyshire and Wakefield, while Manchester, Leeds and Bristol handled distribution.
It employed 168 staff, with 21 in Wakefield and 14 in Leeds. More than half the workers were based in New Mills, Derbyshire.
Ernst & Young said STP was hit by a decline in market conditions, the struggling building sector and high overheads.
Like-for-like sales dropped by around 20% in the first half of 2008. Ernst & Young took 50 inquiries from potential bidders but could not find a buyer to take on the whole business.
Derbyshire-based JB Kind bought the distribution arm for £540,000 in October and acquired part of the joinery operation in Wakefield for £170,000.
The sales safeguarded 54 jobs but the rest of the business has been wound up. In 2001 STP’s managing director Rob Cohen led a management team which paid £15m for the business.
Unaudited management accounts for the six months to July 31 show STP made a loss of £348,000 on sales of £10.9m. In the full year to January losses hit £1.8m on turnover of £22.5m.
In the past few years the company had enjoyed a consistently high gross margin of between 21% and 27%. But profits were wiped out by high overheads – nearly £3m in the six months to July.
