Big Red back in the black

Big Red, the UK systems builder that went into voluntary liquidation last month following a credit squeeze in the aftermath of CHS Electronics going into receivership, has re-emerged as Big Red Computers.

Big Red, the UK systems builder that went into voluntary liquidation last month following a credit squeeze in the aftermath of CHS Electronics going into receivership, has re-emerged as Big Red Computers.

The UK company has negotiated fresh financial backing and has pledged to honour all the old company's customer commitments and warranties. It will continue to build and support a range of PCs and servers.

Martin Prescott, Big Red Computer's managing director, told Computer Reseller News that the winding up of Big Red was unavoidable after CHS went into receivership in October 1999. He said a period of poor trading last summer, together with the increase in Ram prices, had hit the company hard. Also, the boom anticipated late last year failed to materialise because of millennium bug concerns.

Big Red made a refinancing bid in January, but Prescott said an "ongoing payment battle" with CHS's receivers, BDO Stoy Hayward, led to a credit squeeze. "We literally ran out of cash," he said.

He claimed that securing extra credit from large distributors had been impossible once Big Red had reached its limit, and the firm was forced to source product from smaller wholesalers.

The company has since found financing through another bank and received a "substantial" cash injection from Prescott. "We are still using smaller distributors, so we can't get the prices we would with larger ones. But this time we have the backing of our bank, trade credit insurers and trading standards," said Prescott. He insisted that despite the name change customers would not notice any difference in Big Red's products, procedures and service levels.

Industry observers said they have not noted an overall reduction in credit availability following the collapse of CHS, although there has been a marked increase in the number of receiverships since the start of the year.

Eddie Pacey, credit manager at Ideal Hardware, said: "These sort of guys are in and out of business all the time. The only unusual thing [about Big Red] is that it has retained the name."