More details emerge on Cartwright collapse

The profitability of the Cartwright group was already on a “downward trajectory” before the advent of the coronavirus pandemic, with margins impacted by loss-making contracts, according to administrators.

In a report to creditors, Michael Magnay and Daniel Smith at Deloitte LLP said the closure, break-up and sell-off of one of the UK’s leading trailer manufacturers was precipitated by losses in its largest business: S. Cartwright & Sons (Coachbuilders) (SCSC).

The report said: “In recent years, the group has focused on top line revenue growth with reported revenues of £186.4m in FY19, increasing to £209.4m in the unaudited FY20 accounts.

“However, group margin has been adversely impacted, which is attributed to loss making contracts in SCSC.”

During the three months ending June 2020, SCSC’s EBITDA was a loss of £7.8m, although Deloitte added that this was partially offset by profits in Cartwright group’s other divisions.

Amid the financial problems, Covid-19 resulted in a full closure of the group’s manufacturing facility for several weeks from March this year, which placed increasing pressure on the cash position.

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The group eventually collapsed into administration in September and Deloitte said refinancing or a solvent sale of the business were not viable: “Interested parties declined the opportunity, citing the existing debt, potential inaccuracies with financial information, significant creditor arrears and lack of forecasts as key reasons,” it said.

The financial inaccuracies were highlighted after a review conducted by an interim financial director, who identified “certain development costs that appear to have been incorrectly capitalised”, as well as unverified stock figures.

Magnay and Smith said these potential inaccuracies were being reviewed further as part of the administration.

Since the collapse of the group, subsidiaries Cartwright Rentals, Cartwright Fleet Services and Cartwright Fleet Services (Glasgow) were sold to fleet management firm Zenith.

Cartwright Conversions was sold a few days later to Sheffield-based Trek Group.

The report said that based on latest available information, unsecured creditors were potentially owed in excess of £50m across the whole group, with the majority of this in SCSC.

It added: “We currently estimate having sufficient funds to make distributions to unsecured creditors in all of the companies, potentially other than Cartwright Holdings and Cartwright Fabrications.”

The post More details emerge on Cartwright collapse appeared first on Motor Transport.

The profitability of the Cartwright group was already on a “downward trajectory” before the advent of the coronavirus pandemic, with margins impacted by loss-making contracts, according to administrators. In a report to creditors, Michael Magnay and Daniel Smith at Deloitte LLP said the closure, break-up and sell-off of one of the UK’s leading trailer manufacturers was precipitated by losses in its largest business: S. Cartwright & Sons (Coachbuilders) (SCSC). The report said: “In recent years, the group has focused on […]
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