Bullitt Group had $256 cash in the bank at the end, PWC reveals

IP sold to founders in pre-pack administration, product warranties unaffected

The founders of Bullitt Group and subsidiary Bullitt Satellite Connect bought the IP for £210,000 ($269,000) excluding VAT in a pre-pack administration on the same day that PWC was appointed to liquidate the biz.

The sale of the assets to RCD 2023 Limited was confirmed in a Statement of Administrator Proposals report by PCW, filed with Companies House at the end of last week. RCD was incorporated in November by Colin Batt, David Floyd and Richard Wharton – all three of whom had been directors of the Bullitt companies.

Cat B35

Ruggedized phone group takes the Bullitt, calls in PWC as administrative receiver


As outlined in the report, Bullitt Group Limited (BGL) – founded in 2009 and consisting of nine subsidiary entities including Bullitt Satellite Connect (BSC) – ran into troubled financial waters and was unable to find a solution to sell the business as a going concern.

Going back in time, BGL sold a majority stake (63 percent) to Exponent in 2017 but the private equity investor exited the group in March 2019 when it was repurchased by the founders and another private investor BGF.

Trading improved, but in the years that followed BGL was engulfed by something of a perfect storm – including the pandemic and the "ensuing economic fallout," while the war in Ukraine reduced sales in Eastern Europe and more general "supplies issues had meant that some phone models had to be discontinued."

"Together, these issues contributed to losses of over $10 million in FY20 and FY21, with an even larger loss of $22 million in 2022," the report discloses.

To much acclaim, BGL's Defy satellite link was launched in 2023 along with the satellite-enabled S75 phone. Both were expected to be revenue spinners, with the satellite link winning Best in Show at MWC that year. Yet delays to the service's start date meant it launched in June instead of Q1.

PWC found that the group, which sold phones to customers in 70 countries, "subsequently struggled to fund the working capital on hardware sales, which limited its ability to sell products and achieve the targeted growth."

BGL was also "heavily reliant" on invoice discounting services from Bibby Financial Services, but the "lending for satellite invoices under this facility ceased on 6 October 2022" and this dented working capital further, leading to a "period of sustained cash outflow." Bibby was prepared to provide invoice discounting for legacy hardware, but "declined to lend against satellite hardware which was the focus on the Bullitt Group's business model."

To "capitalize" on the positive response to the satellite link and phone, the directors of BGL and its subsidiaries hired PWC to run an accelerated mergers and acquisition (AMA) process in September last year. Twenty bidders for BGL were approached and 12 signed NDAs – however, management at the phone maker and the third parties could not agree on the "significant" requisite working capital injection figure, so the talks ended.

The founders of Bullitt then made an "indicative offer to buy the trade and assets of the business, through a pre-pack administration." That offer was accepted on February 15 last month and finalized on February 28.

"In accordance with insolvency legislation Tom Crookham and David Baxendales were appointed as joint administrators on 28 February 2024 and on the same day a sale of the Relevant IP and other certain assets of the companies was completed to the purchaser," the report states.

Included in the £208,956 purchase price are the books and records for both BGL and BSC, the business IP, customer list, and names. The sale of BGL also included customer contracts. The sale of both entities comes with strings attached, such as a sell on clause.

The pre-pack was the best option, PWC states in the report, as the AMA indicates it achieved the best value possible and alternatives options had been explored. Cash was running out sand the offer was completed within days of it being accepted.

The prospect of preferential, secondary preferential and unsecured creditors receiving payments of their debts isn't looking very likely, PWC reveals.

The costs racked up by PWC prior to its appointment as administrator are over £251 alone. "We will be seeking approval of the unpaid pre-administration costs to be paid as an expense of the administrations and requisite notices and approvals will be sent to the secured creditors," the report declares.

As Reg readers might expect, with the collapse of BGL, all employees were made redundant on the appointment of PWC – including 49 in the UK and 22 across Spain, Germany and Taiwan (where the phones were built).

At the time of appointment late last month, BGL "held cash at the bank totalling circa £200," according to the Statement of Administrator Proposals. Remaining stock of around £176,000 is held in various warehouses in China and will not be recoverable, the report adds.

As for the warranties of phones sold? Bullitt Mobile Limited holds the warranty for the products and has not entered administration. ®

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