Lighthouse pre-pack dispute leads to new liquidator
Monday, July 8, 2019
Creditors are set to appoint a new liquidator for wide-format printer Lighthouse Display International, which was sold in pre-pack in April.
Nottingham-based Lighthouse Display International (LDI) was sold by owner Neil Speed in December 2018 to Stephen Pratt, as Speed, whose pension fund owned the buildings, wished to retire and exit the circa £5m-turnover business.
However, just four months later, on 10 April, Nick Simmonds and Chris Newell of Quantuma were appointed joint administrators of the firm.
According to the administrators’ report, Pratt stated that following the purchase in December he discovered additional debts and liabilities, which had not shown up in what was described in the administrators' report as a "light due diligence". As a result Pratt attempted to downsize and restructure the business in March.
When this failed, the business was placed in administration and some of the business and assets were sold in a pre-pack sale to the newly incorporated Lighthouse Display International POS (LDIP).
Simmonds said: “It was determined that the business was not viable in its current setup and that the sale of its assets would be the way to ensure the best outcome for creditors.
“As such, a pre-pack sale was undertaken in which the business and certain assets were sold to Lighthouse Display International POS. Other chattel assets not sold as a part of this transaction either have been sold since, or are currently in the process of being sold by independent agents.”
In the run-up to administration, the business was marketed and a number of bids were received, including one from Pratt. However, LDIP, which is run by a consortium of businesspeople with Speed as a minority shareholder, was successful as it was the highest bid received that was payable on completion.
The consortium bought the business for £210,000 and the 39 remaining staff transferred under TUPE.
The consortium consists of interim managing director, Jonathan Prutton, interim production director Simon Woods, Tom Mawhood as interim finance director and Neil Speed, Garry Morpeth and Gary Pearce as non-exec directors.
According to Morpeth and Mawhood, there were a number of inaccuracies in the administrators' report, something that the joint administrators highlighted themselves in the report, where they stated that some of the background information supplied by Pratt required investigation "and may not reflect the events accurately".
Mawhood told PrintWeek: “In March 2019 it came to my attention that there was a problem with Lighthouse Display and that Mr Pratt was trying to effect a pre-pack, which did not look favourable to the creditors.
“As there appeared to be the potential of a decent opportunity, I pulled together a consortium of investors I knew who had experience and interest in distressed businesses and put an offer together.
“As part of our due diligence, we had a meeting with Neil Speed, and we decided that his knowledge of the product and market would be hugely useful, so he was persuaded to invest for a minority stake.”
He continued: “The business was purchased out of personal funds from each of the six shareholders. Subsequently, the shareholders have provided significant working capital in order for it to trade.
“We are pleased to be meeting the requirements of all the clients and are trading with many of the former suppliers. There has been a lot of hard work and a long road to go, but the staff have been fabulous. At this stage it is 'so far, so good'.”
Quantuma’s report laid out its intention to investigate the structure and nature of the December 2018 sale, directors’ loans and inter-company balances, and assets sold prior to their appointment.
However, it has been confirmed by Andrew Cordon of Corporate Financial Solutions in London that he is set to be appointed as the new liquidator of the original business at the start of August following a request by creditors.
According to Morpeth, this is due to creditor dissatisfaction with Quantuma’s investigatory efforts and the absence of Pratt from proceedings. Quantuma had not responded to request for further comment at the time of publication.
Currently, a 2015 Inca Onset X1 UV flatbed printer and an Esko Kongsberg C64 digital plotter are up for auction through John Pye Auctions at Lighthouse’s premises with offers to be submitted by tomorrow (9 July). The two machines, run by the original business, were not part of the pre-pack sale.