Ben Woolrych and David Thornhill of FRP Advisory were appointed joint administrators earlier this month on the 6th February. Despite having a turnover of £7.9 million (recorded in March 2013 financial accounts) and a significant sales growth in past years, the toy business has recently suffered from failed product launches.
P&C Distribution has supplied products to Harrods, Hamleys, John Lewis, WHSmith, Selfridges and over 5,000 smaller retailers.
The administrators believe the company is viable, yet felt the best option was to protect the business by placing it in administration while they seek a suitable buyer.
Woolrych said, ‘Whilst the underlying business model appears viable, recent cash-flow has been insufficient to deal with the set-backs from certain product launches and the protection of an administration order was considered appropriate’.
The administrators will look into all areas of restructuring while the company is in administration to ‘maximise the prospects of selling the business as a going concern for the benefit of its loyal staff and customer base’.
In the event of insolvency, it is important you maximise creditors’ interests. Here, FRP Advisory felt administration would protect the company’s assets so the business itself would remain unharmed and be able to successfully continue under a new buyer.
If the company is viable, it’s hard to tell whether a CVA would have been more beneficial. Administration is, however, a powerful process and protects the company against aggressive creditors.