'No acceptable offers' to buy Beta Distribution before it went bust - administrator's report

Foreign currency contracts and £10m overstatement of stock noted as key reasons for distributor's collapse

Beta Distribution contacted 19 potential buyers in a last-ditch effort to stave off insolvency, according to the administrator's report.

The distributor went under in October 2018, owing around £36m to creditors.

The report also states that it is unlikely trade creditors will receive any of the money owed, while secured creditors will not be paid in full.

There will also be "insufficient" funds to pay preferential creditors, including Beta employees.

The report, filed by Deloitte on Companies House, reveals that attempts were made to sell the business prior to appointing administrators, but they "did not result in any acceptable offers being received".

"…the companies' financial position and the quantum of the funding required [were] cited by interested parties as the principal reasons for withdrawing from the process," the report stated.

The failure of the distie is chalked up to a cash loss of around £14m through foreign exchange currency contracts entered into in 2016, which resulted in "severe liquidity pressure".

An overstatement of stock to the tune of £10m was also blamed for the company's financial distress.

Beta reported a turnover of £186m for the year to 31 March 2017.

But the firm struggled during the following accounting period, resulting in a number of creditor insurers pulling support.

"Key suppliers reduced the companies' credit terms following the withdrawal of credit insurance due to declining trading and cashflow," the report stated.

Deloitte was brought in to assess Beta's finances by Lloyds Bank, a secured creditor, when the distributor breached its bank overdraft.

Bad news for creditors

The report offered little cheer for creditors, with even secured creditor Lloyds not expected to receive its full balance.

Just over £25m is expected to be available to pay creditors, but Lloyds alone is owed over £28m.

A statement of affairs filed last month showed that over £14m is owed to unsecured trade creditors, with storage vendor Quantum (£2.1m), Brother (£1.2m) and HP (£921,006) among the largest.

"Although substantial work has already been undertaken and will remain ongoing, it is likely that Lloyds will face a shortfall on its indebtedness," the report stated.

Employees of Beta and The Content Wall (the AV firm it acquired in June) are also unlikely to see their claims as preferential creditors be fulfilled. The businesses had a combined headcount of 108.

Some £7.4m of book debt has been realised since the appointment of the administrator, with sales of stock bringing in £100,000.

The book value of stock at the date of administration was £5.6m, and Retention of Title (ROT) claims have been received on over £2.4m of that. Deloitte added that stock which has had no ROT claims has been earmarked for sale and is currently the subject of ongoing negotiations.

The distie's Belgian arm, Beta Distribution BV, is not subject to any insolvency process and continues to trade.