ICSM Business News: A report says that customers and suppliers of insolvent Victoria Plum saw their cash ‘go down the toilet’

By Harry Mottram: It’s not an unusual deal – a pre-pack that effectively dumps an insolvent company’s debts allowing them to phoenix and continue trading under a different but similar guise. That is what appears to have happened with bathroom outfit Victorian Plum according to a report in Private Eye. And the disturbing aspect is the ‘conflict of interest’ shown by the administrator EY on behalf of the bankers at Secure Trust Bank plc.

Under the heading of Toilet Trouble, the report says: “The pre-pack business sale took all 300 of Victoria Plum’s employees with it , including the continued services of the managing director Martin Hargreaves and finance director Paul McClenaghan (who between them earned £1.2m in the couple of years to February 2022).”

The article also highlighted how a sale of assets – put at £6.3m – was transferred to the new company owned by Cox & Cox, but not the debts of £17 million pounds. Of these there were £4.5 million pounds worth of ‘un-fulfilled orders’ which are to you and me are the paid for orders by customers who will not have the bathrooms they have paid in advance for. And the taxpayer is also out of pocket to the tune of £3.1m according to Private Eya who investigated the transactions.

As the publication pointed out the money paid by customers for bathrooms that will not be installed have seen their cash ‘flushed down the toilet.’

Ian Carrotte of ICSM said this was the sort of pre-pack that has got the scheme a bad name. The Gazette states: “ A pre-pack is an arrangement whereby the sale of all or part of a company's business and/or assets is negotiated and agreed, before an insolvency practitioner (IP) is appointed with the relevant documentation being signed and implemented, immediately or shortly after the appointment is made.”

It lists the pros and cons – the pros are to ensure a business can survive and the jobs are retained in full or part but included in the cons are the lack of transparency and a conflict of interest for the Insolvency Practitioner – which are apparently highlighted in this case.

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