The weakness of the pound, too much stock and inflation were key to the collapse of long-running UK cycle distributor Moore Large earlier this year, administrators have reported.
The business, which could trace its roots back to 1947, fell into administration in March.
Now an administrator's report, filed at Companies House, has revealed how the company suffered in the financial headwinds of 2022 and was eventually unable to pay its debts.
The report reads: “In line with industry trends, the company suffered significant supply chain disruption followed by reduced consumer demand and inflationary pressures. In addition, the weaker pound had a significant adverse impact as the company predominantly purchased goods in US dollars from suppliers based in the Far East.”
The value of the pound has fallen substantially over the last decade. In 2015 it hit its highest value against the dollar since the 2008 financial crash of 1.7. That fell to 1.2 in 2016 following the Brexit vote and while it recovered to between 1.3 and 1.4 in 2021 it fell to 1.07 in late September following then prime minister Liz Truss’s disastrous mini-budget.
The currency has since recovered some ground and is trading at around 1.2 to the dollar today.
Moore Large’s administrator FRP Advisory said that during the pandemic the company had “continued to place orders with suppliers based on increased volumes and extended lead times” but that despite cancelling some orders “where feasible” became “overstocked” and lacked working capital.
The subsequent funding required built up “creditor arrears”.
It detailed how the accountancy firm had reviewed Moore Large’s balance sheet in October 2022 but having established that the company’s creditors would not be able to address its funding shortfall it was engaged to try and sell the company.
It said FRP looked at either selling the shares of the company, or its business and asset, as well as restructuring options.
It added “The AMA [sale] process was run on a restricted timetable due to the mounting cash flow and creditor pressure… Initially three solvent offers were received, one of which was for the shares of the company but subject to the secured creditors agreeing a significant compromise of their debt.
“The offer was accepted but the party withdrew during the due diligence phase citing concerns over the extent of the forecast funding requirements.”
A further search for a pre-pack sale garnered an offer from a company controlled by the company directors but that fell through after “the purchases proposed funders withdrew their offer of funding”.
The company then entered administration.
The stock of Moore Large continues to be auctioned off, with some of the most exciting offers appearing in the last week.
Administrators estimated that unsecured creditors, mostly a list of 156 companies that did business with Moore Large, are set to be left £5.5m out of pocket. The company’s main lender, HSBC Bank, is set to be left £9.3m out of pocket.
