Access2Funding collapsed into administration owing almost £1m before it was rescued by a rival, it has been revealed.
The Birkenhead-based R&D tax relief consultancy was bought by Catax in Altrincham at the end of May after Simon Farr and Anthony Collier, partners at specialist business advisory firm FRP, were appointed joint administrators.
At the time of the announcement, Catax confirmed it would be retaining all 32 of the company’s staff, including chief executive Dawn Coker.
READ MORE: Manchester innovation funding specialist Catax takes over Wirral consultancy Access2Funding
Access2Funding was founded in 2014 and has made more than 1,650 R&D tax credits claims for businesses of all sizes, helping to recover more than £54m.
No mention of the pre-pack administration deal was included in the original announcement but details of how Access2Funding collapsed have been revealed in newly-filed documents with Companies House.
In the documents, FRP confirmed that secured creditor eCapital Commercial Finance will be repaid the full £210,331 which it is owed by Access2Funding.
However, the firm added that it is uncertain that the £5,000 in pension contributions owed to Access2Funding's 32 remaining employees will be distributed as it depends on selling assets and the costs of the administration.
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It also said it is uncertain whether HMRC will be repaid the £481,000 it is owed by Access2Funding because of the same reasons.
FRP added that there will not be sufficient funds available to distribute the £298,000 owed to unsecured creditors.
On how the company entered administration, the FRP document said: "Following various lockdowns as a result of Covid-19, businesses focussed their attention on recouping income from other sources (i.e. R&D tax relief) to ensure survival. This resulted in a sharp increase in turnover.
"As a result, the number of employees increased from 16 to 84 in anticipation of continued business growth owing to greater awareness in the marketplace of R&D tax relief.
"The company also made significant investment in sales and marketing.
"However, a substantial number of existing clients where claims had been submitted in 2020 did not go on to have another claim, or the value of the claims had decreased.
"Despite the acknowledgement that some of the issues faced were temporary, e.g. furlough staff and reduced activity due to Covid-19, the company had to review its expenditure and make necessary cut backs.
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"The number of employees therefore reduced from 84 in April 2021 to 32 in April 2022.
"Claim and value numbers remained low however and despite a reduction in staff numbers, cash flow pressure began to increase and the company fell behind with creditor payments."
In a statement issued to BusinessLive, Mr Farr added: "The Covid-19 pandemic has had a significant impact on all types of firms at different times throughout the past two years. In this case, it was a decline in research and development submission levels from their networks.
"We’re pleased to have secured new owners for our client’s business, resulting in the retention of all members of staff. We wish the team well as they take the business forward."
In a new statement issued to BusinessLive following the release of the Companies House documents, Mark Tighe, CEO of Catax, said: "It really means a lot to us to have saved these 32 jobs.
"There was a really solid business here which just suffered from a bit of bad luck following a period of rapid expansion.
"The disruption caused by the pandemic impacted the rhythm of innovation being maintained by companies, particularly SMEs, all over the 海角视频 and this, in turn, had consequences for the pipveline of R&D tax relief claims.
"We’re going to take this skilled team and build the business back up, which is great news for the North West."
In a statement issued at the time the deal was announced, Dawn Coker, CEO of Access2Funding, said: "I'm thrilled at the opportunity this represents for the business and all of our staff.
"Catax is one of the most trusted names in the tax relief sector and this investment will allow us to leverage their expertise to increase delivery for our clients and continue to grow Access2Funding at pace."