14.01.2009

Allan Access update

In early September of last year Allan Access - the Market Harborough based vehicle mounted lift manufacturer and distributor - was placed in administration, by its factoring company, leaving behind substantial debts.

Its assets were purchased by owner Phil Allan a day or two after the failure of the company, following a statement by the administrator that the lack of funds prohibited further trading under his control.

Phil Allan therefore stepped in using his dormant company, Allan Access Hire to acquire the business assets, based on a valuation made by Winterhill Asset Ltd on behalf of the administrator, and what he was willing or able to pay.

Allan has until now refused to discuss the situation based on the fact that his solicitors have advised him not to comment while they consider legal action against the factors and possibly the administrator. We have now met with Allan and can carry his explanation of events.

Allan Access has been trading in its current format since May 1999. It was a manufacturer of its own range of van mounted lifts and was the worldwide mounting company and distributor for Nifty vehicle mounts, while also handling Terex Utilities and Socage products in the UK.

The company had experienced, along with several others, a challenging time in late 2007 due to the shortage of chassis - including Land Rovers - which provide the base for the company’s popular 13 metre 4x4 lift. That situation eased at the start of the year and the company had a surge of built up business in addition to new orders it was winning with the recently acquired Terex Utilities line.

Allan had factored its debtors since 2006 with a major invoice finance company. In May the company carried out its usual half yearly audit and declared a couple of minor discrepancies. Not unusual with a confidential discounting plan that requires funds paid to the company to be transferred within 48 hours. According to Allan these were sorted out in the normal way, although the attitude of the factor had clearly changed compared to prior visits.

The factor then carried out a second unannounced audit two months later and once again found some minor discrepancies, such as a payment that had arrived 72 hours previously and not been transferred. This time the attitude of the factor was highly aggressive and it declared Allan Access in default and demanded repayment in full while charging a 10 percent penalty.

Allan says that after the first inspection it was clear that the factor wanted out of the business and he had already started looking to find an alternative funder.

He now told the factor that he would do this, but needed time to agree a deal with a replacement factoring company. By late August he had two offers, one from Bibbys and one from Liquidity. Both were acceptable, but he says the Liquidty proposal offered additional financing products and was therefore his preferred choice.

The factor then called him and said that if it did not receive payment in full within 72 hours it would, under the rights of its contract, place the company into administration in order to protects its assets. Allan says that his bank, Lloyds, told him that they could not do this and that it would fight such a move.

The Liquidity line of credit was approved towards the end of that 72 hour period and he informed the factor of this at 9:00 am on the morning of the deadline. The factor then demanded that the funds be in its account within the hour or it was going to court.

Unable to get the funds – around £81,000 according to Allan - transferred fast enough, the factor, ignoring the confirmation that the new line of credit was in place, went to court and obtained an order to appoint an administrator. This in spite of the fact that the Factor had lien on over £124,000 worth of Allan debtors.

Within 10 to 20 minutes a team of 15 men from the administrators and associate company SFP Recoveries, descended on the company’s premises in an "aggressive manner" and took control. It subsequently turns that they had been waiting down the road ready to pounce as soon as the order was signed.

Allan then says he switched to plan B which was to do everything he could to save his company, given that Liquidity were still happy to fund the business he used that line of credit and his dormant rental company to do a deal there and then and acquire the assets.

As for the £645,000 shortfall in the accounts, Allan disputes the amount and based, he says on double counting of some debts, by not allowing for agreed contra deals, along with penalties and charges imposed by the Factor and the Bank, both of which have been paid out in full. – It is odd that the administrator's calculation appears to estimate that the factor will not collect any of the £124,000 worth of debts, Hardly realistic.

Since the administration the company has explained the details of the situation to its key suppliers, most of which have agreed, according to Allan, to carry on trading with the new business. As to the losses, incurred by the creditors, Allan says that he is not at all happy about it and is taking legal action against both the factor and the administrator whom he believes collaborated to the detriment of the business and other creditors.

He says that when faced with the situation on the morning of the administration he had no option but to switch tactics and try and secure the business. He says that he has had excellent support from both Nifty – which is also the largest creditor of the old business – and Terex Utilities.

The company has now booked several sizable orders for truck mounted lifts with many of them destined for export. He says that the company is currently employing more people that it was at the time of administration and earning valuable export business for the UK.

It is sending Nifty vehicle mounts all over the EU, particularly to Scandinavia but also Germany and as far afield as the Falklands. It is also handling most of the EU mounting work for Terex Utilities while seeking local distributors for the American based company.

Meanwhile an investigation into the actions of the Factor and the Administrator continue. On a personal front Allan says that the period has been a nightmare and has included attacks on the premises and employee cars, along with threats against his wife. In spite of all this, the business is looking up and he says he has learnt some very valuable lessons.

Vertikal Comment

Phil Allan has clearly upset a number of people with the administration, a good deal of it generated by his unwillingness to talk to most creditors. Sitting with him last Friday, it does seem that rather than being malicious and scheming, he is probably guilty of being naïve while not appreciating the essence of speed after the first warnings.

It certainly does not look as though he is one of those who engineers administrations and liquidations purely in order to line their own pockets and defraud. For example he did put some money back into the business through the directors loan account, while out and out fraudsters do the opposite. He genuinely appears to have been caught out by the UK’s arcane bankruptcy laws which only serve financial companies and adminstrators. Although based on our correspondence many of you do not agree with this.

In the current economic climate, caused mostly by the ineptitude of those financial corporations, perhaps the time is right to change the administration laws, perhaps adopting some of the ideas from America’s Chapter 11 rules?

In the meantime there will of course be those who claim that while they have been left with nothing in this affair Phil Allan, was drawing over £11,000 a month in salary even as the company got into difficulty and still has a business which he has purchased at a very attractive price with a clean balance sheet.

This is true, but forgetting how he got into the situation, there are very few if any who would not have done exactly what Allan did when the chips were down.

Many will argue of course that they would have not got into the position in the first place. This was after all a company with a strong order book, some decent inventory and an established name.

Phil Allan is also planning to write a letter to Cranes&Access countering comments made by readers in the last issue. We will of course publish it.