How a Salford-based cleaning products supplier collapsed into administration after struggling with its "significant debt" has been revealed.
Curer-Chem Ltd, which trades as Hygienique, was sold in a pre-packaged deal in February in a move that saved all jobs. Business advisory firm Quantuma oversaw the process.
At the time, the buyer was not revealed while the value of the deal was also not released.
However, a new document filed with Companies House by Quantuma has confirmed both details as well as how the business entered administration.
Background
The business started trading in 1984 and initially made and supplied cleaning chemicals to companies and industry in Manchester.
Over the years the firm's direction changes towards supplying washroom consumables, toilet paper, hand towels and hand soap.
Quantuma said that becoming a distributor for "some of the leading brands of these products facilitated good growth into supplying office blocks and larger institutions".
The original founders of the business retired in 2006 while a new division was launched in 2009 to distribute PPE and workwear uniforms. This also led to it expanding into Liverpool and along the A580 corridor.
Quantuma added: "Following a sustained period of successful trading, in December 2020 the company received an approach from acquisitive entrepreneurs who were seeking to build a portfolio of diverse companies".
How the company entered administration
In June 2021, the company's sole shareholder, Mike Rose, sold his shares to a third party in a deal worth £1m.
The acquirers granted security to Mr Rose in the form of a share pledge over the shares of the company in the event of any default by them over the payment of the £200,000 deferred consideration.
Quantuma said: "In late 2022, the acquirers had defaulted on successive quarterly instalments of the deferred consideration and Mr Rose enforced the charge over the company's shares in order to realise value remaining in the shares at the time.
"Following their acquisition, the acquirers had introduced significant debt to the company, which included an invoice finance facility, asset finance and two CBILS loans.
"Whilst the company was trading with an underlying profit, Mr Rose had become concerned, in his capacity as director, with the company's ability to service the increased debt costs.
"In addition, the company had built up arrears with its landlord for the sum of c.£16,000 and was forced to enter into a payment plan with HMRC with arrears of c.£70,000.
"The company's increased difficulty servicing its debts led to its invoice finance provider to become concerned with the company's prospects and ability to survive as a going concern.
"The company's position continued to deteriorate leading to it requiring support by its invoice finance provider above levels available under its facility.
"By the end of January 2023, the company's invoice finance provider was forced to halt further advances of funds from the company's facility, which meant that the company had become unable to pay its debts as and when they fell due and was therefore insolvent.
"Without the prospect of an immediate significant injection of working capital to meet short-term creditor obligations, the company's board of directors had no alternative other than to consider a formal insolvency process of administration to protect the interests of creditors."
The company was eventually sold in a pre-packaged deal for £70,000 plus VAT to a firm associated with Mr Rose, Intellimar.
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