Jobs are lost in collapse of Kingswinford firm
Nearly 80 workers have been made redundant after the collapse of a furniture firm in Kingswinford – just six months after it was saved from another crisis.
Cashflow problems led to administrators being appointed in a bid to rescue upholstery manufacturer The Sofa Club, which was previously known as Kevin France Upholstery.
But it has now been revealed that a buyer could not be found for the business this time round and the factory has shut down.
The Sofa Club, based in First Avenue, on the Pensnett Trading Estate, was formed when TD Upholstery Ltd bought Kevin France Upholstery last August for £55,000.
It was a "pre-pack" deal, a term used for a quick sale of a company, negotiated before administrators are appointed.
The furniture firm then slimmed down from 100 workers to 78.
However, the business ran into difficulties again and the directors called in Stephen Clancy and Philip Duffy of worldwide financial advisory and investment banking firm Duff & Phelps.
The joint administrators, who were appointed on February 22, tried in vain to find a buyer but eventually had to make all 78 staff redundant four days later.
Stephen Clancy, of Duff & Phelps, said: "We were appointed to sell the business as a going concern and had discussions with a number of interested parties.
"However, the negotiations were ultimately unsuccessful.
"As a result the business was shut down and the factory vacated with all employees made redundant on February 26."
Mr Clancy blamed cashflow problems for the company's demise. When Kevin France Upholstery hit financial trouble last year, it was bought by the firm's director Anthony Divito, with two unconnected third parties and a member of the management team.
Rebranded as The Sofa Club, it traded from the same Kingswinford premises as Kevin France, which used to have more than 100 employees when it called in administrators from Begbies Traynor following difficult trading.
Kevin France, originally set up in 1998, had previously been successful, with turnover increasing from £10.95 million to £11.1m in the year leading up to the end of December 2010, although the pre-tax profit was only £4,000 for the period.
The company then blamed anticipated orders arriving later than budgeted for and delays receiving fabrics leading to a loss of production, with staff having to reduce their hours to three or four days a week.
Unsecured creditors of the company were owed £2.1m at the time of its administration last August. The figure included £1.6m owed to trade suppliers and almost £300,000 to HM Revenue & Customs.
