Marine safety and leisure company Cosalt plc, which was formerly listed on the London Stock Exchange, collapsed with debts of more than £70m after it was hit by cashflow problems stemming from trading difficulties and an accounting scandal in a Scottish subsidiary, it has emerged.
And despite cash raised from a pre-pack deal for two divisions, and a £5.8m sale of the group's workwear operation to majority shareholder David Ross, creditors are facing up to a multimillion-pound shortfall.
David Kelly and Andrew Ross of PwC were appointed joint administrators of Grimsby-headquartered Cosalt plc on 15 February 2013 and immediately sold the company's interest in maintenance businesses GTC Holdings and Cosalt Offshore Norway to Dunwilco 1793, a company backed by NBGI Private Equity, the majority shareholder of Scotland-based ATR Group.
The joint administrators subsequently scrutinised three bids for Ballyclare, a workwear business operating from Stockport, with a base in Barnsley and two distribution centres in the South East, before electing to sell the division to David Ross.
That deal netted £5.8m, including £25,000 for "Cosalt memorabilia", and the sales to Dunwilco brought in a further £6.1m, but creditors are still expected to be left significantly out of pocket.
The biggest secured creditor is Cosalt's pension scheme which is owed £51.8m while HSBC and the Royal Bank of Scotland are owed a combined total of £11.4m. Administrators estimate the secured creditors could recover 17 per cent of the monies owed to them.
Unsecured trade creditors are owed £9m but are not expected to receive any cash.
Cosalt had been experiencing cash flow difficulties for the two to three years prior to its administration following poor trading and accounting irregularities in its GTC Group.
Additional working capital had been made available by David Ross' Oval 2245 company over an extended period, but the expiry of Cosalt's lending facilities in December led to the group's eventual administration and the sell-off of its trading divisions.