Skye IT insolvency options still being weighed

Reseller ceases trading with debts approaching £1m and administration or liquidation imminent

The business recovery firm overseeing the wind-down of Skye IT has stressed the reseller has not yet formally entered administration.

Although Chelmsford-based Skye IT has ceased trading and its 23 staff have been laid off, various insolvency options are still being considered, according to Taylor Aitken director David Brason.

Skye IT has debts approaching £1m but Brason said the HP Gold partner's large debtor book could see creditors recover up to 30p in the pound.

"The position of the company is that it has ceased trading but it is not in administration and not in liquidation," said Brason, who is overseeing the case.

"It will do some form of act of insolvency but whether that is a liquidation or if the factoring firm, RBS, chooses to appoint an administrator, is still in discussion."

Skye IT's sister companies Skye UAE, Skye Direct, Skye Recruit and Skye Training will all continue to trade, Brason added.

Skye IT's chief executive, Paul Swords, was a director at VAR Future Networks Systems, which also collapsed owing several million pounds to distributors.

However, Brason said he had sympathy with Skye IT's directors.

"It has been trading for nine and a half years and has been extremely successful. For the last six months, its market has been incredibly competitive and it identified there was no way it could continue," he said.

"This is the worst recession we have ever seen and I do not think you can reproach the directors for the way they ran the firm – they had not taken huge salaries."

Eddie Pacey, managing director of EP Credit Management and Consultancy, said he was not surprised by news of Skye IT's demise, which as recently as last year was talking up its growth ambitions.

"The group structure was rather overly expressed," he said. "I expected the business to fail in four years so it has actually done a little better than I thought it would."

Brason stressed his firm is still collating information on creditors and staff entitlements but said the situation would probably come to a head this week.