Addspace Furniture Ltd was based at 85,000 sq ft premises in Hellaby and supplied domestic flat-pack or contact furniture to high street retailers such as Argos.

Administrators were appointed in January 2023 and 62 employees have been made redundant.

A report filed by administrators, Kroll, showed that the company posted significant losses for the past few years. Accounts show a loss before tax in 2021 of £432,437 and £369,259 in 2020. Directors attributed this as a direct result of the economic downturn in the UK, reduced customer orders, together with lower margins resulting from cheaper overseas competitors entering the UK market.

Administrators explained that “as a result of the losses, HMRC liabilities and trade creditors had been stretched. Repayment plans were put in place with these Creditors in order to improve the short-term cash flow of the business whilst trade performance initiatives were undertaken.”

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The report adds that: “The Company historically suffered from under investment in new plant and machinery which in itself compounded the Company’s problems of a deteriorating cash position. Regular machinery breakdowns disrupted sales activity and customer confidence. The majority of the plant and machinery needed modernising to benefit from more complex cutting and finishing to existing product lines, as well as adding new product offerings to the Company’s customers. New technology would also have significantly reduced the time taken to manufacture many of the customers product lines.

“In order to invest in new technology and reduce the accruing creditor arrears, the Directors looked to secure investment from outside sources. An investment of £250k was introduced into the Company in February 2022 from one of the customers, Accentuate Group Limited, in exchange for 25% shareholding in the Company. These funds were ultimately utilised to fund restricted trade credit facilities and therefore the Company was unable to upgrade any of its machinery.

“The Directors went back to the market during November 2022 seeking further investment to provide additional working capital and capital expenditure funding. Whilst there were several parties willing to look at the opportunity, no additional funding was obtained.”

Kroll undertook work to find investment, or a buyer for the company and despite ten parties signing non-disclosure agreements, no offers were forthcoming and options to resuce the company were exhausted. Trading ceased at the end of February.

Lender, Close, has been repayed in full after chasing debts but the company’s bank, HSBC, may struggle to be repaid for its Coronavirus Business Interruption Loan and other debts.

In total, unsecured creditors totalled over £2m, with HMRC also owed around £500,000. Administrators say that as there has been no sale or investment, “it is not anticipated that there will be sufficient realisations to enable a distribution to the unsecured creditors of the company.”

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