Steljes yet to pay creditors as stock sold for fraction of value - administrator update

Adminstrator sells stock worth £5m for under £1.8m as warranty issues slash value

Defunct distributor Steljes is yet to pay its unsecured creditors after going into administration eight months ago, an adminstrator's report has revealed.

Steljes went bust in May last year after nearly three decades in business, owing an estimated £6.7m to 124 unsecured creditors.

Administrator AlixPartners said last year that it expected these unsecured creditors to receive a return of three pence in the pound, and the latest progress report on Companies House shows that "unsecured creditor claims are yet to be agreed".

The report, for the period 23 May to 22 November 2016, also stressed that the likely return to creditors is an estimate only and is subject to change.

Creditors

Of Steljes' two secured creditors, Bank of Scotland is expected to receive all of the £50,344 owed, while Lloyds Bank Commercial Finance (LBCF) is expected to receive around £4,485,000 of £4,526,152.

Unsecured creditors are expected to receive considerably less, with AlixPartners estimating that a pot of around £237,000 will be available to satisfy the £6.7m of debt - equating to around three pence to the pound.

The claims agreement process is set to start in the next six months, with interactive display vendor SMART Technologies the biggest creditor on the books, owed just under £3m.

Preferential creditors - namely ex-employees owed unpaid wages and holiday pay - are expected to receive payments in full totalling around £76,000.

Fifty-four Steljes employees were made redundant in May when the administrator took control of the business while 17 staff were kept on to assist the administration process, but have since been made redundant.

Stock woes

At the beginning of the administration process AlixPartners said that shifting Steljes' remaining stock, valued at around £5m, would prove difficult because of the inability to provide warranties.

The same issue meant debtors were reluctant to pay what they owned, it said.

In the latest report, AlixPartners said Steljes' entire stock had been sold for just under £1.8m; and £3.7m of its £4.5m book debt had been paid.

Of the remaining debt, roughly £250,000 has been written off and just over £500,000 is still being chased.

The report said: "The majority of the debts have proven difficult to collect as debtors have often contested payment on the basis of the reduced warranty provision available as a result of the company's insolvency.

"The administrators have engaged in protracted negotiations with both debtors and the product manufacturers, with the aim of ensuring the appropriate product protection measures could be arranged so as to illicit payment of the balances due.

"Where agreement could not be reached, credit notes, write-offs and other settlement arrangements were reached in respect of debts totalling approximately £250,000.

"An approximate balance of £542,000 remains to be collected. The administrators are continuing to pursue these debts and will commence legal action to ensure recovery if appropriate."