Ideal pre-pack leaves creditors out of pocket
More than 100 creditors were collectively owed £7.5m when Liverpool-based Ideal Modular Homes was placed into administration in November are likely to get 2.5p in every pound owed after the company was bought in a pre-pack deal.
A total of 127 companies, authorities and individuals were owed money after the collapse of Ideal Modules, trading as Ideal Modular Homes. Among them were:
- Vivalda cladding supplier £144,000
- John Sutch Cranes £294,000
- DT Engineering North West £87,900
- City Electrical Factors £95,000
- Close Brothers Asset Finance £1.7m
- Belgrade Insulations £98,000
- Madisons Commercial Solutions £82,000
- Lymers Assist / Aldermore £220,000
- Liverpool City Council £66,000
Some creditors could receive 2.5p in the pound, according to the administrator’s report, while others such as Close Brothers stand to get more of what they are owed.
Shareholders were also owed large sums: Christopher James Snape £417,000, Hans Jimmy Furland £1.7m, Luke Barnes £63,000, Craig Burkinshaw £812,000. All these shareholders, apart from Barnes, are now involved in IDMH, the newly formed company that acquired Ideal Modules.
IDMH bought the business and assets of Ideal Modules in December, promising fresh investment and business as usual.
At the time of the sale, administrator Quantuma said: “A seamless transfer of assets and all 76 employees to the new company will see a quick and smooth transfer of the business, allowing trading to continue uninterrupted for suppliers and clients.”
However, the administrator’s report filed in December said unsecured creditors can expect to receive only 2.5p of every £1 owed.
Ideal Modules was established in June 2017. The directors were Graham Owens and Luke Barnes. Owens resigned as a director in October 2019. Thomas White was appointed a director in April 2020 and Andre Muller in October 2020. Luke Barnes resigned in October 2020.
The company won a large contract at Property Alliance Group’s Uptown Irwell for 156 apartments in Salford next to the River Irwell. Another large contract was awarded to a consortium including Ideal by the London borough of Greenwich last year.
During its first full trading year ending 30 June 2019 the company turned over £3m and made a £374,000 profit.
Administrators claim that at the start of the pandemic the company “had to cease operations for a number of months due to the national lockdown” and took steps to reduce costs.
In June 2020, the company was struggling with cashflow and obtained hire purchase finance and a loan with Close Brothers Asset Finance under the Coronavirus Business Interruption Loan Scheme.
In September 2020, the company also took out an invoice discounting facility with Bibby Financial Services to assist with cashflow.
Also, in September, one of the customers issued a ‘pay less’ notice affecting a “sizeable payment”. This had a “significant” impact on the sales ledger and Bibby appointed quantity surveyor Gateley Vinden to review its positions and exposure to Ideal’s debtors.
As a consequence of this review, further cash advances from Bibby to Ideal were stopped and any further lending restricted. The outstanding payment was not forthcoming from the customer, whose name is withheld in the administrator’s report. Of the outstanding customer payment of £2.3m, Bibby had advanced £209,000.
Directors sought advice from administrators in October 2020 and Quantuma was appointed administrators in the following month.
The business and assets were sold to IDMH in a pre-pack deal for £338,000.
The Irwell modular homes and materials were sold to Three Mile Beach Maintenance Services for £130,000.
Ideal’s sales ledger at the time of the administrator’s appointment was £3.3m and relates solely to the Irwell contract. The Irwell debts are being “reviewed for recoverability”.