The end of Evolution

The retail operation's creditors meeting proves eventful.

The creditors meeting for Evolution Holdings was held on 23 December, during which suppliers were able to question the directors about the company's demise.

As exclusively revealed in PC Dealer (10 December), Evolution went into creditors' voluntary liquidation, with debts of about #1 million. It was the third time the operation had suffered financial problems under different owners.

The creditors' meeting was attended by two directors of Evolution - Martin Hodgson, managing director, and Graham Bragg, marketing director - as well as two representatives from liquidators Baker Tilly. Twenty creditors of Evolution were also present.

The Anglo Corporation - consisting of 19 shops, 135 staff, own name 'Hurricane' PCs and a mail-order arm - was taken over by Evolution in April 1997, at which time four shops were closed and 15 staff were made redundant.

Hodgson insisted the company's sole problem was a lack of working capital, a situation compounded by limited credit by suppliers. To alleviate this problem, Evolution was floated on the Ofex exchange - an alternative to the Stock Exchange and AIM - in a bid to raise funds quickly.

Hodgson claimed the failure of the attempted flotation was the start of the company's main problems, something he blamed on the collapse of Display IT, the best known Ofex listed company. But when Display IT shares were suspended, confidence in the exchange evaporated. The failed bid was therefore, according to Hodgson, a judgement on the exchange and not the company.

At the meeting, angry suppliers fired questions at Hodgson and Bragg.

Hodgson was accused of knowingly buying an insolvent company with the idea of running it into to the ground, while creaming off excessive consultancy fees. In reply, Hodgson claimed he had bought the company in good faith for #350,000 and hoped to bring in more investors to keep the business trading.

Hodgson said he believed the company had suffered from the excesses of the previous management but remained a viable business. He conceded it was short of working capital, but with #1.5 million worth of stock he claimed it could still trade effectively - a claim later disputed by an ex-manager of one of the company's branches, who suggested that 60 per cent of this stock was obsolete.

Asked who was in financial control of the company, Hodgson pointed the finger at Chris Murray, who had 'gone to America and never come back'.

Hodgson also claimed to have personally lost #135,000.

Throughout the onslaught, Hodgson continued to blame the Ofex deal. The issue was due in July and was recommended as a 'buy' by Display IT's brokers.

The shares were suspended and confidence in the exchange collapsed. By the beginning of August the company had managed to raise #750,000 - short of the #1 million required by its prospectus.

Costs were drastically reduced by moving premises to Sidcup in September.

More shops were closed and staff made redundant. Monthly overheads were cut by #135,000 a month.

Between August and November last year, seven interested parties looked at Evolution with a view to investing, the company continuing to trade despite restocking and credit problems. Two days after the investor deadline, Evolution ceased trading and ended one of the oldest established retail operations.