administration
Discussion
LONG STORY SHORT
We have a supplier - lets call them FREDS - Freds makes bolts - we ordered 20,000 bolts from them in Jan 2019 to be supplied over 24 months.
To date we have drawn down 50% of that number, in line with the Jan 2019 agreement.
They went into administration on Wednesday - and to be honest after 4 years of hassle, missed deadlines, huge staff turnover, incorrect specs on bolts etc - I am not surprised but I am extremely disappointed as our bolts are unique and made just for us.
I heard today that the old MD is looking to buy back all the existing stock from the administrators for a silly price and then carry on with a new brand etc
We are still 10,000 bolts light for 2020 and obviously need to make new plans for safe supply. I have enough stock for around 4-6 months here at my HQ.
IF you were a RUTHLESS businessman - how would you play this out? (just interested in looking at my options before I decide what is best for my business)
We have a supplier - lets call them FREDS - Freds makes bolts - we ordered 20,000 bolts from them in Jan 2019 to be supplied over 24 months.
To date we have drawn down 50% of that number, in line with the Jan 2019 agreement.
They went into administration on Wednesday - and to be honest after 4 years of hassle, missed deadlines, huge staff turnover, incorrect specs on bolts etc - I am not surprised but I am extremely disappointed as our bolts are unique and made just for us.
I heard today that the old MD is looking to buy back all the existing stock from the administrators for a silly price and then carry on with a new brand etc
We are still 10,000 bolts light for 2020 and obviously need to make new plans for safe supply. I have enough stock for around 4-6 months here at my HQ.
IF you were a RUTHLESS businessman - how would you play this out? (just interested in looking at my options before I decide what is best for my business)
khushy said:
LONG STORY SHORT
We have a supplier - lets call them FREDS - Freds makes bolts - we ordered 20,000 bolts from them in Jan 2019 to be supplied over 24 months.
To date we have drawn down 50% of that number, in line with the Jan 2019 agreement.
They went into administration on Wednesday - and to be honest after 4 years of hassle, missed deadlines, huge staff turnover, incorrect specs on bolts etc - I am not surprised but I am extremely disappointed as our bolts are unique and made just for us.
I heard today that the old MD is looking to buy back all the existing stock from the administrators for a silly price and then carry on with a new brand etc
We are still 10,000 bolts light for 2020 and obviously need to make new plans for safe supply. I have enough stock for around 4-6 months here at my HQ.
IF you were a RUTHLESS businessman - how would you play this out? (just interested in looking at my options before I decide what is best for my business)
Not the easiest position to be in. We have a supplier - lets call them FREDS - Freds makes bolts - we ordered 20,000 bolts from them in Jan 2019 to be supplied over 24 months.
To date we have drawn down 50% of that number, in line with the Jan 2019 agreement.
They went into administration on Wednesday - and to be honest after 4 years of hassle, missed deadlines, huge staff turnover, incorrect specs on bolts etc - I am not surprised but I am extremely disappointed as our bolts are unique and made just for us.
I heard today that the old MD is looking to buy back all the existing stock from the administrators for a silly price and then carry on with a new brand etc
We are still 10,000 bolts light for 2020 and obviously need to make new plans for safe supply. I have enough stock for around 4-6 months here at my HQ.
IF you were a RUTHLESS businessman - how would you play this out? (just interested in looking at my options before I decide what is best for my business)
The undrawn bolts: have they been manufactured? Are they just sitting there waiting to be drawn down? Or are they yet to be manufactured using equipment that the old MD is looking to buy?
If the former, I would be on to the administrator sharpish saying that your bolts are unique to you, because the bolts are unique the contract is specifically enforceable (ie you can compel performance rather than just have to settle for damages), and you're willing to pay for them so either (a) hand them over now in exchange for payment, or (b) look forward to receiving an application for permission to sue the co in administration, and an injunction to restrain any dealings in the bolts until your rights over them have been established by a court.
If the latter you're probably screwed (no pun).
If by being ruthless you mean getting personal rather than just seeing this as business, then you could shill bid for the assets of the co to force the price up for the director. You could ask (and fund) the administrator to dig aroundn into the director's conduct to a degree greater than the money that's left in the company will allow. But the bottom line here is that unless there's some dirt to be dug up you're throwing good money after bad.
Edited by BlackTails on Friday 10th January 09:28
Ordering a continued supply on call offs presumably means that you have only paid the insolvent company for the bolts that you have received to date, i.e. parts were invoiced upon delivery?
In that case, as above, if you think the company has already made further stock of 'your' part then it would be worth approaching the administrator to see if you can buy that stock immediately.
Regardless of any remaining stock you need to be be finding a new supplier, as it sounds like you wouldn't have much faith in this company if it were to be resurrected by the same MD.
In that case, as above, if you think the company has already made further stock of 'your' part then it would be worth approaching the administrator to see if you can buy that stock immediately.
Regardless of any remaining stock you need to be be finding a new supplier, as it sounds like you wouldn't have much faith in this company if it were to be resurrected by the same MD.
Few questions (mostly already asked):
1. Have you paid for them all, or a even 'design' fee element - or only paid for those delivered?
2. Have you paid for all those delivered or do you have a balance o/s?
3. Have they manufactured the remaining items or are they to be made?
If:
You've not paid for those delivered I would refuse to pay the o/s citing a breach in contract and the additional costs of sourcing elsewhere (this will be a bit of a fight but probably not worth the administrators time depending on value o/s obviously and your counter claim has to be reasonable and mitigated)
They have manufactured them you could seek to buy them from the administrator but they'd probably not wish to jeopardise the existing potential deal to sell everything to the MD (if I was the MD I would be insisting on buying everything I know has value and a side deal with you would significantly reduce my bid). No harm in trying though and if he's really trying it on you could outbid him just for those items (sold without warranty though)
They've not been manufactured yet - personally I'd go elsewhere given comments about former frustrations
If you've paid a design fee and own the right to the design and want to control who makes them in future (this may or not be an issue) then I'd contact the administrator and the MD to set out your claim for the design rights.
I think your strongest position is that they've manufactured them and you do a back to back deal with the MD to buy them all on day 1 and on short payment terms - he's likely to need the cash, will be selling for a super profit and keen to do the deal. Raises concerns about where to store them etc. but only you know whether that's feasible or not.
The administrator is unlikely to sell the debtor balances to the MD (it's possible, but unusual) - but if they've been manufactured then you can use this to your advantage as you can do a deal to buy the residual stock for a discount and commit to pay the balance in one go - this will (should) make everyone happy and means you're buying stock from a trading company as opposed to from the administrator (hence will have some warranty attached) - your converse position when negotiating with the MD is that you'd walk away from the stock (presume useless to anyone else) and incur additional costs that would be set off against your o/s balance - wave this in front of the administrator and he'd put pressure on the MD to do the deal - but as I say, if I was the MD and could immediately recover a proportion of my outlay from selling a batch of stock I'd leap at the opportunity.
1. Have you paid for them all, or a even 'design' fee element - or only paid for those delivered?
2. Have you paid for all those delivered or do you have a balance o/s?
3. Have they manufactured the remaining items or are they to be made?
If:
You've not paid for those delivered I would refuse to pay the o/s citing a breach in contract and the additional costs of sourcing elsewhere (this will be a bit of a fight but probably not worth the administrators time depending on value o/s obviously and your counter claim has to be reasonable and mitigated)
They have manufactured them you could seek to buy them from the administrator but they'd probably not wish to jeopardise the existing potential deal to sell everything to the MD (if I was the MD I would be insisting on buying everything I know has value and a side deal with you would significantly reduce my bid). No harm in trying though and if he's really trying it on you could outbid him just for those items (sold without warranty though)
They've not been manufactured yet - personally I'd go elsewhere given comments about former frustrations
If you've paid a design fee and own the right to the design and want to control who makes them in future (this may or not be an issue) then I'd contact the administrator and the MD to set out your claim for the design rights.
I think your strongest position is that they've manufactured them and you do a back to back deal with the MD to buy them all on day 1 and on short payment terms - he's likely to need the cash, will be selling for a super profit and keen to do the deal. Raises concerns about where to store them etc. but only you know whether that's feasible or not.
The administrator is unlikely to sell the debtor balances to the MD (it's possible, but unusual) - but if they've been manufactured then you can use this to your advantage as you can do a deal to buy the residual stock for a discount and commit to pay the balance in one go - this will (should) make everyone happy and means you're buying stock from a trading company as opposed to from the administrator (hence will have some warranty attached) - your converse position when negotiating with the MD is that you'd walk away from the stock (presume useless to anyone else) and incur additional costs that would be set off against your o/s balance - wave this in front of the administrator and he'd put pressure on the MD to do the deal - but as I say, if I was the MD and could immediately recover a proportion of my outlay from selling a batch of stock I'd leap at the opportunity.
PS - I'd act ASAP as it's not unheard of for management to offer to buy everything they want at (low) price X, as long as accepted within very short timescale. "Otherwise we loose goodwill etc., and our offer will be much less." Therefore administrator can justify his decision to creditors.
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