One of the UK’s biggest suppliers of car parts has entered administration, despite denying that such a move was on the cards recently.
Over 1,200 people have lost their job as a result of Unipart Automotive going to the wall.
Unable to sell
The Solihull-based firm was forced to deny it was considering entering administration after the Solihull-based firm contacted administrators last week. The talks were said to be ahead of a possible sale of the firm, with company director Andrew Jeffrey telling the Financial Times:
“We are not in administration and have no plans to go into administration.”
However, efforts to find a buyer for the company flailed, with the firm’s distribution centres and branches across the country starting to be sold off separately.
Stress and risk
Just over 200 members have staff have been kept on by the administrators, with most of the company’s 1,813 staff receiving redundancy notices. However, it is hoped that many will be ‘redeployed’, according to the firm.
After years of suffering from what it calls ‘financial stress’, the decision to split up the firm was taken by the administrators as the level of risk with a whole purchase is seen as too high.
A spokesman for the administrator said that too much cash was needed to restructure the firm, adding:
“The level of cash … required to rescue a more substantial part of the business posed too much risk for most interested parties.”
Counting the cost
The admission by the firm that it had suffered from financial stresses over recent years will not surprise many. Firms throughout the country have had to reevaluate their market positions amid the recession, taking hard decisions.
Many are profiting from these hard decisions, with others seeing the benefits of bringing in outsourced accounting solutions to help them ride the storm. With the burden of managing accounts in-house being eased, it allows companies to invest in more profitable channels and alleviate cash flow issues. It has helped directors retain control of their firm’s too.
As in the case of Unipart Automotive, many firms have been the subject of buyouts and takeovers in recent years, often watering down the viability of the organisations. With adequate bookkeeping, small firms can maintain their independence and work to create market share more effectively.
In 2011, Unipart Automotive was sold by Oxford-based parent firm Unipart Group. Retaining a non-controlling minority stake, it sold the firm to the Netherlands-based H2 Equity Partners investment fund.