KLARIUS GROUP COLLAPSE CREDITORS OWED £50 MILLION

A true picture of the debt created at Klarius Group Limited has been revealed with total liabilities standing at nearly £50 million, according to the administrator’s report from KMPG which CAT has obtained.

The sale of QH intellectual property rights and brands names netted £1.7 million, but short-term working capital lender Cable Finance is owed £8,514,695 and total unsecured creditor claims total £49,276,048. The actual company entity in administration is QHA Realisations Limited (formerly Quinton Hazell Automotive Limited) as the name was changed when the QH brand was sold to Tetrosyl.

There are 17 pages of trade creditors in the report who are owed a total of £12,083,876. The Caterpillar Logistics contract includes a £10 million exit fee, and there is £16,874,149 owed to Klarius inter-group creditors.

Estimated total assets are put at £7,800,357, so while preferential creditors are likely to receive a dividend, to cover staff pay for example, the KMPG report estimates a deficiency of £41,639,178.

“Based on current information, there may not be sufficient funds available to enable a distribution to the unsecured creditors other than via a potential prescribed part distribution, the quantum and timing of which is currently not known,” the report says.

Thirty suppliers have visited the Hinckley warehouse to identify stock under 64 Retention of Title claims.

The KPMG report also details the movement of stock worth approximately €2 million from the UK to France in December 2012 and reads: “QH France is subject to French insolvency proceedings and the Joint Administrators are in discussion with the French Judicial Administrator regarding either the repatriation of this stock or the payment of compensation.”

Timeline

Restructuring began in 2011 to reduce overheads while at the end of the year Burdale, owned by Wells Fargo, reduced the size of its finance facility to Klarius Group.

Klarius Group started to look for alternative lenders and investors in April 2012. Four offers in principle were received from lenders, but none were completed and an offer for the shares in the company was withdrawn in August, 2012.

Cable Finance provided short-term working capital in October 2012, while at the same time marketing of the business for sale also began with Houlihan Lokey.

In all, 80 financial institutions, investors and buyers were contacted between April and October 2012 in a bid to avoid insolvency but, as the KPMG report says: “It was not possible to reach an agreement for additional financial support from its current lenders, major creditors, shareholder or prospective buyers.”

KMPG Restructuring was engaged in December to market the business and assets. There were 19 interested parties, but only one offer was received for the Klarius emissions business –now in the hands of Klarius Products Limited – none for the QH business or the water pump factory in Colwyn Bay. A deal for Klarius France also fell through.

Five expressions of interest were made in the QH intellectual property rights and brands which were sold to Tetrosyl for £1.7 million.

Tony Wilson gave a candid interview to CAT only recently, in which he apologised for the mistakes which had been made.

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