Insolvency practitioners issued a warning about the pitfalls that can result from buying a business without due financial investigation, following the collapse of Slough-based CAS Office Equipment into liquidation.
According to liquidator Pannell Kerr Forster, Steven Egner, who acquired the reseller?s shares in September 1996, was not made aware of the extent of the company?s entire financial situation.
The overdraft and loan facilities which had been secured against a debenture created in 1993 were withdrawn by the bank, and Egner found several of the company?s debts were old or the subject of dispute.
John Alexander, national director of corporate recovery at Pannell Kerr Forster, said: ?The collapse of this company only serves to underline the importance of undertaking a due diligence investigation before buying into a business. Without a full examination of the finances and stock, the buyer is vulnerable and runs the risk of having his fingers badly burned.?
CAS Office Equipment also kept stock that was unsaleable due to missing parts and suffered from ?staff problems?, according to the liquidator. Previous owners Jones and Wijayatilake established the firm in 1990. The extent of the debt is not known.
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