Plumbs, a specialist in producing made-to-measure loose furniture covers, curtains and reupholstery, was sold for over £200,000 in a prepack deal following its administration.
Sarah O’Toole and Jane Steer of PwC were appointed as joint administrators of Plumbs Limited on 15 October 2024.
Detailed in a newly filed report on Companies House, Plumbs experienced a downturn in trade while increasing costs put continuous pressure on profitability.
Prior to the Covid-19 pandemic, Plumbs traded profitably but experienced significant challenges in relation to the aftermath of the pandemic. Since then, increased operational costs have impacted the company while uncertainty in the market has driven a reduction in consumer spending.
“Subsequent attempts to improve lead generation and revenue growth have not been successful, leading to additional pressures on working capital and therefore liquidity,” the report said.
Plumbs identified potential cost saving plans to better meet customer demand, but was not able to implement these changes in full given the liquidity pressures that built up.
Over the past few years, sales have declined from £24.9m in 2022 to £20.5m in 2024, with losses widening to £413,000.
Adding further pressure to the company, the imminent threat of a winding up petition by the HMRC, meant that the company had to launch an accelerated sales process to secure its future, which ultimately resulted in the business entering administration.
On appointment, the joint administrators completed a pre-pack sale of the majority of the business and assets of the company to Sarah Plumb Limited, a newco owned by a connected party, for a total consideration of £225,000.
Upon completion, £125,000 was paid with £50,000 deferred for a period of four weeks and another £50,000 to be deferred for a period of 12 weeks. The breakdown of the transaction included £104,000 for plant & machinery, £67,000 for stock and £48,000 in relation to debtors.
As part of the deal, the purchaser agreed to honour all customer orders where a deposit had been paid. The sale also included the transfer of nearly all 239 employees.
As for creditors, preferential creditor, the HMRC, is owed £1.4m and is expected to receive some distribution, while unsecured creditors are owed £4.1m. It is expected that creditors will suffer a shortfall of £5m.
Sarah O’Toole, joint administrator and partner, PwC, commented at the time of appointment: “We are delighted to have secured a deal that not only preserves jobs in the local community but also gives the Plumbs business, which has been operating since 1960, a sustainable future.
“The purchaser has committed to honouring all outstanding customer orders for which deposits have been paid. We wish the Sarah Plumb Limited team every success as they take the business forward.”
