I had a company referred to me last week which had been placed into Administration by their factoring company a few days before Christmas.
The company had not been particularly happy with their factoring facility and had been asking about early termination when out of the blue the Administrators came marching in the week before Christmas.
The director does not know why the factoring company put them into Administration as the factors have been vague and the court documentation was missing but one of the reasons given was that the director had been elusive and the factors had been unable to speak to them for some while. They seem to have completely ignored the fact that the so called elusive director had been in constant email contact with another of the factor’s directors for some while.
The company is a subcontractor in the construction industry operating on contracts with Applications for Payment etc yet was factoring with one of the smaller factoring companies not known for it’s appetite for the construction industry.
There are no assets within the company apart from the debts and as the company was relatively small turning over just £500,000 one has to wonder at the point of appointing costly Adminstrators as they already had possession of the only asset.
The Administrators themselves are a firm well known in factoring circles and they have told the company’s directors that if they setup another company to trade again unless they buy the assets off them for £50,000 the Administrators will have forensic examiners crawling all over the old company’s books to find evidence (which doesn’t exist) of wrong doing.
As the assets excluding the debtors aren’t worth anything my guess is that the Adminstrators are trying to put the frighteners on the company otherwise they won’t get their fees paid.
This looks like yet another cautionary tale of a company being needlessly and pointlessly put into Administration by it’s factoring company and from what I have been told the termination fees applied have been quite sizeable.
I have put the company in touch with an insolvency lawyer who is happy to review the whole case to see if there is anything that can be done at this late stage and hopefully when the whole story comes out there will be another story for James Hurley at The Telegraph as his articles generate far more publicity than anything I can write.