Furniture supplier Delcor was sold in a prepack deal after entering administration earlier this year.

John Hedger, of Seneca IP Limited, was appointed as administrator of manufacturer and retailer of crafted furniture firm Delcor Ltd on 26 September 2024.

Detailed in newly filed documents on Companies House, the business, which generated a turnover of around £2.5m per annum and employs 43 staff, was going through a restructure as overhead pressures continued to mount.

Under the review, the owner, which had taken control of the business back in September 2021, uncovered financial irregularities including arrears in creditor payments, especially in respect to suppliers and rent liabilities.

“In addition, the previous owners had borrowed heavily and taken advantage of the many incentives provided during the Covid pandemic,” the report said.

The current director attempted to cut overheads and filed a Research and Development claim to sum of £75,000, which would’ve helped ease cashflow issues to some extent. However, the claim was put on hold and further worsened its cashflow issues.

Coupled with the ongoing cost-of-living crisis and mounting liabilities, the business could not continue to trade under its current structure.

Following the appointment of administrators, a prepack sale was completed to Delcor Upholstery Limited, a newco that was incorporated on 30 July 2024, and is under common ownership. The sale valued £100,000 with £70,000 being attributed towards stock.

Upon completion, £20,000 was paid upfront with the remaining balance of £80,000 to be paid over 12 months. There was an alternative offer of £60,000 from an unconnected party, which was rejected.

As for creditors, unsecured creditors are owed a collective sum of £1.5m, which includes £1.1m owed to the trade, £50,000 owed to banks and over £200,000 owed to the HMRC. It is expected that creditors will suffer a shortfall of the entire amount.