Lighting, mirrors and artwork business Pagazzi Lighting was unable to recover from a number of impacting factors in the build up to entering administration.
In the events leading to its collapse, Pagazzi suffered from the impact of the cost-of-living crisis, as well as the Ukraine war, which had a material impact over the last six to nine months.
The company attempted to undertake a number of restructuring and cost reduction measures in an effort to mitigate the impact. These included reducing staff numbers, which saw positions such as HR Manager, IT Manager and Warehouse Manager “done away with” to create “large annual savings”.
In addition to this, the company made a number of other smaller cost savings in respect of marketing, transport and consumables. These measures were, unfortunately, insufficient and, having taken professional advice, the company was placed into administration.
Kenneth Pattullo and Paul Stanley, both of Begbies Traynor (Central) LLP, were appointed as joint administrators of Pagazzi Lighting Limited on 29 September 2023.
After entering administration, three of its five stores in Dunfermline, Perth and Inverness, all closed, while the other two in Aberdeen and Warrington, were able to secure a licence with landlords to continue to trade through a connected company, Pagazzi Lighting Services Limited. This licence was initially for one month; however, it is understood that new terms are being or have been negotiated since.
The connected company also entered into a pre-appointment agreement to purchase the inventory and assets, which included shop fittings, display stands, counters, signage, lighting, point of sale and computers, for a sum of £29,550, while stock was also sold for the sum of £68,500.
As for creditors, the business owed preferential creditor employee claims £20,000, which are expected to be repaid from realised assets valuing £136,000. The HMRC is also owed £205,000, while unsecured creditor claims totalled £635,000, which includes debts to connected companies of around £180,000. Barclays Bank is also owed £27,500 and Market Finance is owed £127,000. It is expected that creditors will suffer a shortfall of £1.1m.
