Former staff of Utilitywise are in line to receive the majority of the money they are owed after the company’s collapse, a new report has revealed.
In February, Utilitywise fell into administration after it failed to find a new owner willing to inject £10m into the business to keep it afloat.
As a result the energy consultancy, one of the biggest in the region, was forced to close its door, making 581 members of staff redundant.
Workers were told they were losing their jobs suddenly, with management sending out an email at 3pm telling them to attend a meeting an hour later. Staff were then told they were being made redundant immediately, which was met by angry reactions from those affected.
But more than six months after Utilitywise went bust, the firm’s former workers have finally been given some good news after administrators say they are set to receive the majority of the £1.2m they are owed.
In the administrators’ report, FTI Consulting outlined how much money it expected Utilitywise’s creditors would be repaid. Former workers are classed as preferential creditors and are eligible to receive money owed to them through wages, holiday pay and pensions contributions.
The report said: “We are currently waiting confirmation from the Redundancy Payments Services of the level of preferential claims against the company, which are expected to exceed £1.2m. Based on current estimated floating charge realisations and costs of realisations, we anticipate a dividend of 98 pence for every pound owed to preferential creditors.”
Creditors have lodged claims of £116.1m against the company and while staff are set to receive 98% of what they are owed the same cannot be said for Utilitywise’s other creditors.
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NatWest and RBS is owed £21m from the company but as a secured lender, they are only estimated to receive between £3.8 and £3.9m.
The remaining unsecured creditors were owed a total of £76.1m when the company collapsed, but FTI does not believe there will be enough funds to pay any of this money back. Similarly the firm’s shareholders have claimed £17.8m but will receive nothing.
The administrators’ report also confirmed that former employees of the firm are taking legal action against Utilitywise for the way they were made redundant.
“A number of employees have made claims to an employment tribunal. We continue to assist the tribunal by providing information in relation to the background to the redundancies that took place during the administration,” the report said.
The details of the employment tribunal have yet to be revealed although sources have claimed in the past that it relates to the fact that Utilitywise failed to hold a 45-day consultation period with staff before they were made redundant.
Utilitywise’s collapse came after a difficult 18 months when the company was forced to delay the publication of its financial accounts, suspend trading on the London Stock Exchange, and bring in a new auditor to examine its accounts.
Eventually the firm’s banks said it would only renew its lending if the firm could find £10m of investment to inject into the business. It was hoped a new owner could be found who was willing to support the business, but ultimately a sale was not possible.