A LONG-running Wigan packaging firm and the jobs of its 35 staff have been saved – by a pre-pack deal.
Belmont, which has been trading in Hindley for more than 30 years, was hit by a fall in operating profits and the loss of long-standing customers after they relocated operations overseas prior to entering administration.
But a new company, named Dawn Packaging Ltd at the date of purchase and subsequently renamed Belmont Packaging Ltd, has acquired the business out of administration in a £1m deal. The purchaser’s sole director is the daughter of the company’s sole director.
In so doing the business and its workforce were saved.
A pre-pack deal takes place where an agreement for the sale of an insolvent company’s business and/or assets has been put in place before the company formally enters administration. They have become increasingly popular in recent years.
Belmont Packaging was founded in 1978 and operated from three warehouses occupying 80,000ft sq site on the Hindley Industrial Estate.
It specialises in the manufacture and sale of corrugated fibre board and packaging.
A report from its administrators Leonard Curtis said the business had a 30-year record of producing good profits which were invested back into the business.
But in the last three years profitability has declined.
This is mainly because of the general poor market conditions as well as the loss of a number of long-standing customers, who accounted for about 10 per cent of turnover, because they moved their operations abroad.
Raw material price increases also hit its financial viability as well as the fact that the company was not in a position to cut overhead costs in proportion to the reduced profit margin.
Although it completed a refinance shortly before the appointment of administrators it continued to experience creditor pressure.
As a result JM Titley and A Poxton of Leonard Curtis were appointed joint administrators in November.
According to the administrators, the company’s secured creditors are Positive Cashflow Finance Ltd and the Trustees of the Moloney Family. Positive Cash Flow was owed a total of £690,826 at the date of appointment.
Positive funded the purchaser and as a result it has been repaid in full.
The Trustees were owed £407,519 at the date of appointment and are also expected to be repaid in full.
Preferential creditors, which includes accrued holiday pay owed to eight members of staff made redundant prior to the administration as well as wages owed to the staff retained by the purchaser, are expected to be owed £15,178 and are “likely” to be repaid in full.