More directors expected to opt for liquidation in 2009

Jan 7 2009 by Peter McCusker, The Journal

Number of firms hit by downturn

Recent administrations and liquidations

THERE has been a raft of administrations in recent months including Woolworths, MFI, Adams and, locally, Arctic Windows and the Officers Club.

The collapse into administration of crystal and china maker Waterford Wedgwood this week put 2,700 jobs at risk in the UK and Ireland.

A Christmas Day rent bill of £3.5m led to the administration of the Cramlington-based Officers Club, but within hours the company’s management refloated the company under a new name TimeC 1215 Limited .

The move saved 900 jobs, although 32 of the 150 stores, including those with the biggest rent bills in the region at the MetroCentre and in Sunderland, were closed.

Days before Christmas Near Zero CO2 Ltd, which employed between 10 and 15 people manufacturing eco-friendly prefabricated homes for self-build projects went into liquidation. When it ceased to trade, from its base in Hadston near Morpeth, it owed £716,678 to its creditors and had assets of £9,317.

Simon Lundy and Andy Haslam of Begbies Traynor in Newcastle were appointed as joint liquidators of the company.

Mr Lundy said: “A lack of business and obviously the problems of the property market have affected it. There has been a lack of funding – it needed more to be able to sustain itself.”

In October The Comfort Food Company, based in Pudding Chare, Newcastle, went into liquidation, owing more than £100,000.

Differences

What are administration and liquidation?

Administration

When a company goes into administration an insolvency practitioner is appointed to administer its affairs and becomes responsible for the day to day running of the company.

The appointment of an administrator can be made by the directors, shareholders, a bank or other creditors.

The administrator must perform his functions with the objective of either rescuing the company as a going concern, achieving a better result for creditors than a liquidation, or realising assets for creditors.

Liquidation

A liquidation or winding-up can be initiated by shareholders (a creditors voluntary liquidation) or by a petition being presented to a court, usually by a creditor (a compulsory liquidation).

Liquidations result in the closure of the business, realisation of assets and distribution of funds amongst the company’s creditors.