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Case Studies

Retail and wholesale of fabrics and needlecraft goods

customer background

The directors of the business acquired as going concerns two businesses supplying both the wholesale trade and retail customers fabric and supplies required by needlecraft customers. The directors invested significant sums acquiring the businesses plus additional sums on updating websites and working capital.  

The company incurred a trading loss for the first year post acquisition. Attempts were made to cut costs and increase margins however, there was limited scope for this, due to pricing from competitors, and the need to remain competitive in the market place.  Despite the Company’s continued appeal to the public it was difficult to achieve profitable margins. Redundancies were effected to cut costs, and additional finance was introduced to aid cashflow.  

These efforts helped but when the company’s major competitor was sold to an American entity with investor support, they found it impossible to compete with the online and offline advertising from this major competitor. The directors decided they were not prepared to make any further investments into the company. They sought advice from their accountants who recommended they seek advice from The Business Debt Advisor team.  



Following a review it was apparent that it was worthwhile seeking a sale of the business and assets. The Business Debt Advisor prepared Business for Sale particulars recommended that agents were instructed to carry out valuations. The sale was advertised online and in relevant publications. This generated interest from 20 interested parties who were asked to sign NDA’s. It became apparent that despite the interest, it was unlikely that a going concern sale would be achieved.  

In the meantime, the directors resolved to take steps to convene meetings of members and creditors to place the company into liquidation. Safeguards were put into place to ensure that the position as regards the Company’s assets and liabilities did.  The Directors ensured that only orders that could be fulfilled were taken, Retention of Title Claims were dealt with promptly and appropriately, and a “closing down sale” was initiated. The closing down sale generated a 400% increase in online offers with 630 orders materialising.


The Liquidator and her team together the agents JPS Chartered Surveyors plus with the help of the directors to maximise recoveries for the assets. The outcome was:- 


Assets  Book Value   Sums Recovered  
Goodwill   42,000  5,000 
Stock and trading Realisations   85,000  30.980 
Cash at Bank   46,411  48,500 
Book Debts   2,580  636 
Total   175,991  85,116 

Unsecured creditors have received a dividend todate of .. p in the £ and it is anticipated that there will be a further distribution to creditors of .. in the £. The major creditors were the directors who have recovered some of their investment but it has proved to be an  


Careful consideration must be given to all options available to a financially distressed business. For more advice, fill out our Contact Formand we will be in touch. Alternatively, call our FREE ADVICE LINE on 0800 781 0990. 


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