Insider Media Limited

Published: 28 October 2011

Administrators at collapsed Birmingham retailer Floors-2-Go rejected potential offers from rivals Allied Carpets and Carpetright. According to a statement of affairs from Senate Recovery, both offers for Floors-2-Go – which crumpled owing almost £12m in unsecured debts – were deemed unsuitable.

Warwick-based recovery specialist Sentate was appointed as administrator of the company's parent Floor My Home in August this year. When Floors-2-Go ceased trading on 25 August, a pre-pack deal worth £702,000 was immediately arranged. Sentate secured the sale for the continued trading of 38 stores and the jobs of 169 employees.

Senate director Jeremy Bowden confirmed to Insider that the purchaser was Nixon & Hope, a company formed for the purposes of the acquisition.

Despite the pre-pack agreement, 192 jobs were lost as the company entered administration for the second time in three years.

Administrators Ian Pankhurst and Bowden said "all options were considered" at the time of their appointment, including a company voluntary arrangement (CVA). However, it was decided that this was not a viable option as there were no real prospects of raising further funds.

A sale to a third party trade buyer or competitor was also considered by Bowden and Pankhurst, who said interest was received from both Allied Carpets and Carpetright.

"Allied Carpets approached the company asking if it could buy or merge with them," states the report. "They were in their second restructure and struggling.

"The other possible purchaser was Carpetright. They were posting repeated profit warnings and going through a store closure programme to reduce costs. It was considered they would be unlikely to be interested in purchasing some or all of the business."

After these options were deemed unsuitable, restructuring through administration was "the only viable option" for Floors-2-Go.

At the time that the statement of affairs was submitted to Companies House (21 October), the business had a total deficiency of £11.8m.

It owed £8m to trade and expense creditors. Two divisions of HM Revenue & Customs were out of pocket to the tune of more than £3m.

Of the trade creditors, the biggest loss is to German company Classen Flooring, which is owed £1.62m. Aston Villa FC, the Birmingham office of KPMG and Coventry City Council are also named as creditors of the company.

The report states that Floor My Home should have "sufficient funds" for a dividend to the unsecured creditors. However, it added that this would be dependent on final realisations and costs of the administration.

The company's assets totalled £256,994, comprising plant and machinery, stock, motor vehicles and cash at the bank.

Preferential creditors comprised employee arrears and holiday pay, totalling £139,475.

The purchasers of newly-formed Nixon & Hope have agreed, where possible, to honour all customer contracts up to 24 June 2011, Senate confirmed.

Senate Recovery is set to hold a creditors' meeting on Wednesday (2 November).