All 40 jobs were lost after Scottish electrical firm BGL Contracts entered administration earlier this year. Recent documents have now revealed what caused its collapse.
Company background and administration
Operating in a "highly competitive market", the company officially entered administration on July 9. Geoffrey Isaac Jacobs and Alistair McAlinden of Interpath Advisory were named as the joint administrators.
BGL Contracts, established in 2009, was a subcontractor that specialised in electrical fit-out to clients across sectors including leisure, hospitality and automotive. It initially traded from premises at 31 Lister Rd, Hillington, Glasgow.
Reasons for collapse
On September 2, the administrators released a report, available on Companies House, outlining BGL's background and what happened in the lead up to its collapse. It also confirmed that all employees were made redundant immediately upon appointment.
Administrators wrote: "The business operated in a highly competitive market and, in recent months, had struggled to overcome financial challenges including rising costs, low contract margins and the rephasing of some major contracts."
"The directors worked hard to allow the Company to operate through the challenging market conditions and personally provided significant funding support."
"Discussions were held with its major suppliers where payment plans were implemented to pay down aged creditor balances and support cash flow requirements. However, ongoing working capital pressures coupled with a gap in the pipeline of upcoming projects meant the Directors ultimately concluded the business was no longer viable."
Financial details and next steps
After exploring all options, the firm was placed in a scenario where it could no longer pay its debts. After seeking legal advice, it was placed into administration and officially ceased trading on the appointment of Interpath Advisory.
BGL's only secured creditor is its invoice financing facility, Bibby Factors Limited. Principal debt on appointment totalled approximately £25,000, however interest, fees and charges mean it is "estimated" to be £60,000. Administrators say it "should recover its principal indebtedness from debtor recoveries."
The amount owed to preferential creditors (employees) was estimated at £75,000. Administrators have said that "it is uncertain whether there will be a dividend to ordinary preferential creditors."
The HMRC is marked as a secondary preferential creditor and is owed £142,000, based on company records. However, the HMRC is yet to make a claim with administrators who have said it is "uncertain if a dividend will be available for unsecured creditors."
Following the outline of administrators' proposals, it is anticipated that "the most likely route" for the Glasgow electrical firm will be dissolution. Interpath is now seeking approval for its proposal and will provide updates in further reports.
It comes as numerous Scottish businesses have been impacted by challenging conditions, with sectors including housing, banking, cosmetics and food and drink being affected.
Earlier this month, Cars4You Ltd entered administration, resulting in all 26 employees being made redundant. George Lafferty of BTG was appointed the administrator on October 2.
Originally headquartered in Edinburgh, the independent, family-run business operated from five main showrooms across Central Scotland. These were located Straiton, Dunfermline, Falkirk and two in Edinburgh.
Operating as a used car retailer, it had an inventory of around up to 1,500 used cars, alongside light commercial vehicles. Administrators said it faced "increasing pressure" following a change in consumer spending habits due to the cost of living pressures.
