Jobs have been saved by a rescue deal after well established North East manufacturer Formula Plastics collapsed into administration.
Insolvency experts were appointed to the County Durham firm, which has made components used by major automotive brands such as Nissan and Honda, earlier this week. And now joint administrators at FRP Advisory have brokered a deal with newly established North West company, Formula Components Ltd, which is backed by investor Baaj Capital.
The move has protected 34 jobs at Formula Plastics' Newton Aycliffe facility where it makes a range of plastic injection moulded components for car manufacturers, consumer goods brands, lighting brands and food packaging customers. The business was first launched in 1996 and has since built a specialism in high-tolerance precision components.
It has enjoyed a longstanding partnership with regional investor NEL Fund Managers, which helped to launch the firm nearly 30 years ago. A £100,000 sum from the North East Small Loan Fund, supported by The European Regional Development Fund via the Recovery Loan Scheme was Formula's latest injection from NEL in 2022, marking its seventh investment into the firm. That funding had been intended to help Formula regain ground lost during the pandemic, which was said to have been challenging for the business.
Administrators at FRP say they had been called upon following a period of unspecified financial difficult at Formula Plastics, caused by delayed production. Following a speeded up sale process, they found an agreement with Lancashire-based Formula Components.
The Chorley-registered business was set up last month and is backed by Baaj Capital which specialises in making investments into distressed businesses. Baaj bought into troubled fashion retailer In The Style Fashion in 2023 before it went into administration this year and was acquired by the investor again via a new entity in a pre-pack deal.
The family office investor was also reported to have been a potential suitor for discount retailer The Original Factory Shop, before it was eventually sold to Hobbycraft owner Modella Capital.
FRP said operations at Formula's Newton Aycliffe facility will continue as normal, with minimal disruption for customers and suppliers. All 34 employees have transferred to the purchaser through the TUPE process.
Shaun Hudson, joint administrator and director at FRP Advisory, said: “As a long-established business with nearly 30 years of experience, Formula Plastics has built a strong reputation for quality and a highly skilled team. While delays to electric vehicle programmes placed unsustainable pressure on its cash flow, we’re very pleased to have secured a sale that preserves jobs and enables continuity of operations under new ownership. We wish the new team every success as they build for the future.”
