Almost £4m was owed by a children's arts and crafts maker when it collapsed into administration last month, it has been revealed.
Founded in 1973, Brian Clegg supplied both retail and educational markets across England and Wales and operated from one unit in Rochdale and another in Middleton.
The company entered administration at the start of February, with the majority of its 36-strong headcount made redundant.
READ MORE: Click here to sign up to the BusinessLive North West newsletter
In a newly-filed document with Companies House, administrator FRP has detailed how much the business owed before it entered administration, the reasons behind its collapse and its subsequent purchase by a competitior.
In February, the specialist business advisory firm said Brian Clegg had been "loss making for some time and suffered from sustained cashflow pressure from rising input prices".
FRP said an "accelerated merger and acquisition process" had been conducted but, without a viable offer, the business was placed into administration.
Teaser documents had been issued to over 340 potentially interested parties which resulted in 24 signed non-disclosure agreements.
Most Read
A total of four formal offers were received to acquire the business and/or assets of the company.
FRP said that three of the offers were for the business as a going concern on a pre-packaged basis. But the firm added that one was "materially below asset value and therefore did not represent a good outcome for creditors" and two had "onerous conditions attached, rendering them undeliverable".
The remaining offer was submitted by the purchaser, a competitor of the company and was for an initial £375,000 plus VAT. The offer was later revised to £387,000 plus VAT. A sale was completed on March 3.
In its new document, FRP said: "In the months leading up to the appointment of joint administrators, the business had experienced margin pressure as a result of increases raw material and utility costs.
"This exacerbated cash pressures towards the end of December 2022 and was compounded by a reduced order book, in part by restricted budgets in the education sector."
According to FRP, HSBCIF was owed £358,000 when Brian Clegg entered administration. The firm said HSBCIF had been repaid its principal debt but the account is being reviewed for final costs and charges.
HSBC was also owed £1.1m, with the bank set to receive a distribution following the sae of property but FRP it is unclear if it will be repaid in full.
Don’t miss
Meanwhile, secondary preferential creditors were owed £271,000 but FRP said there is expected to be insufficient funds to make a payment in full.
Unsecured creditors were also owed £2.1m, with the administrators also saying there is expected to be insufficient funds to make a distribution.
READ MORE: