Misco UK has laid off 300 staff, as expected, after ceasing to trade and appointing administrative receiver FRP Advisory to pick through the ashes of the loss-making business.
El Reg revealed at the start of this week that the Northamptonshire-based firm’s boss Alan Cantwell was trying to raise additional funds to rescue the company – and he'd had a deadline of the end of play yesterday to get it done.
“Around 30 jobs are expected to be retained [at the HQ] through the administration process,” a spokesman for FRP told The Register. The case is being handled by FRP partners Geoff Rowley, Tom MacLennan and John Lowe.
The UK operation was part of the group that was acquired by Cantwell, backed by private equity biz Hilco Capital in March for £1. Misco had been previously owned by Systemax in the US but was sold because the management team was not able to turnaround its fortunes.
The country operations in Spain, the Netherlands, Italy and Sweden will continue unaffected.
Cantwell started to cut overheads when he took over the business, making redundancies, closing the Watford office and the warehouse and distribution centre in Greenock, Scotland. But in reality, these actions should have been taken some years earlier.
The death knell came when credit insurers began cutting their exposure to Misco - the same thing killed Comet - and distributors became unwilling to deal with the reseller, with just a few supporting the business until recently.
Sources told El Reg that Cantwell was in discussions with US reseller PCM, which previously acquired Systemax’s reseller business in the US, a costly process. Talks towards the American firm also taking on the UK organisation clearly failed.
“As part of efforts to recapitalise the company, the directors initiated a marketing process to protect the UK business as a going concern and engaged in constructive discussions, but once firm offers failed to materialise, the pressure on cash-flow was unsustainable,” FRP told us.
Misco also received a winding-up petition from HMRC over unpaid VAT, leaving it with no “viable option other than to seek the protection of administration”. Translation: it was the straw the broke the camel’s back.
HMRC used to be a principal creditor when companies went under, but the law was changed some years ago and these days the tax collector isn’t nearly so keen to wind up companies that owe it money.
Rowley at FRP said Misco was unable to “deal sufficiently with the rapid deterioration in cash-flow after the sudden tightening of credit insurance terms.
“The UK business had moved to a system of supply chain outsourcing of stock, with increasing levels of automation to enable greater efficiencies with suppliers and distributions and overall lower cost, however these efforts came at a time of heightened competition from other globalised online retailers which have eaten heavily into margins of even established resellers like Misco,” he added.
Many Misco UK staff may have lost their job but sources told us that they were paid their wages this week, which is more than has happened in other company failures… 2e2 springs to mind. ®