North East energy consultancy Great Annual Savings has fallen into administration with the loss of more than 100 jobs after a restructuring plan was rejected at a High Court hearing.
The former Sunderland AFC shirt sponsor, based in Seaham, County Durham, had put together a plan in a last ditch bid to counter a winding-up order tabled by HM Revenue and Customs. The company operated for 10 years in the energy sector, helping businesses to reduce their variable costs in energy, water, telecoms, merchant services and insurance, but has now ceased trading.
The company had traded through challenging times in the pandemic when staff had to be furloughed, but had built up liabilities owed to HM Revenue and Customs and has since been challenged by rising costs. When the winding-up order was made, Great Annual Savings (GAS) called in advisors from Shoosmiths and FRP Advisory to help reshape the business.
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The two business restructuring specialists worked with bosses at GAS on a restructuring plan which involved a schedule of repayments to HMRC. However, the company’s plan was not sanctioned by a judge in the High Court of Justice Business and Property Courts – and the company was immediately placed into administration.
Martyn Pullin and Allan Kelly of FRP Advisory confirmed they were appointed as joint administrators to The Great Annual Savings Company Limited (GAS) on May 16. They said the impact of Covid-19 on energy consumption with its customers seeing restricted trading and energy usage caused by lockdowns, along with the added strain associated with the energy crisis and ongoing war in Ukraine, meant the business was no longer able to meet its financial obligations.
Mr Kelly, partner at FRP, said: “GAS had been a profitable, growing business prior to Covid-19 but has been significantly impacted by the pandemic and the subsequent energy market crisis over the last 18 months. The directors put forward one of the first Restructuring Plans for a SME trading business to reduce its liabilities to sustainable levels.
“However, the court did not sanction the plan and the directors had no alternative but to seek the appointment of administrators. Regrettably, this also meant all 115 staff were made redundant on appointment. We’re now supporting impacted staff and preparing for an asset sale.”
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Mr Justice Adam Johnson handed down his judgement, which detailed how there were 15 classes of creditors within the restructing plan and that at 12 of the 15 meetings, the plan achieved 100% support. However, HMRC rejected the plan at one meeting, and at another meeting, two out of three energy suppliers also voted against the plan.
In his judgement, Mr Justice Johnson said: “Historically, the operations of the company and the parent company have been successful, on paper at any rate. In fact, in August 2019, the parent company returned a dividend to shareholders of roughly £19m.
“Under the plan, the estimated return to HMRC is £600,000 - the equivalent of 9.1p/£, assuming a debt of £6.6m. I consider that HMRC acted rationally in voting against the plan. Given its status as a major in the money creditor, and the strong terms in which it has voiced its objection, not only in light of the facts of this particular case but also given its critical public function as the collector of taxes, I think HMRC’s views deserve considerable weight. The company has not discharged the evidential burden of showing that HMRC would not be any worse off under the plan.”
An HMRC spokesperson said: “We are reviewing the findings of the court. We will continue to support customers with tax debts and do everything we can to help those who engage with us to get their tax affairs in order, including offering payment plans.”
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