A Rainham construction logistics specialist has been saved by its parent firm in a £50,000 pre-pack deal that experts said would save at least 17 jobs.
Smarthub Logistics entered administration on 12 December but was immediately purchased by Focus Group Logistics (FGL) which allowed for a “seamless transfer of the business”, according to an independent expert.
Administrators at FRP Advisory said Smarthub’s business model incurred significant fixed overheads, including staffing, transport and infrastructure costs.
Its service portfolio included consolidation centres, value-added services, transport and distribution and reverse logistics.
However, its inability to adjust costs quickly in response to the recent economic downturn put the business under severe cash flow pressure and it depended heavily on FGL for financial support.
In a report compiled by The Pre-Pack Pool, which was set up to provide more transparency about pre-packaged administrations, agent David Lawler said FGL is owed around £2.2m by Smarthub Logistics.
He added that by acquiring its customer lists and goodwill, as well as software, databases and intellectual property, FGL could extend contracts to former Smarthub customers without incurring additional fixed overhead costs.
“The purchaser is an established logistics business in sectors complementary to those in which the company is active,” Lawler said.
“It should have the management, financial and geographic infrastructure to accommodate, support and grow the business.
“Owing to its financial pressures, the alternative to the proposed transaction is for the business to be closed down and for the assets to be sold piecemeal.
“A pre-pack sale via administration enables the best opportunity for continued service to customers and a seamless transfer of the business,” he added.
“This should ensure employees retain their jobs; that returns to the secured creditor are maximised as a result of an ongoing provision of service to the customers and likelihood of enhanced returns from book debt collections and that the sale of the business and increased book debt collections should ensure the best position for preferential and unsecured creditors.”
