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Standing Firm Against Pre-Pack Unfairness
Following yet another controversial glazing industry pre-pack administration, Gary Morton of the Boing Boing Group gives his take on the practise and how...
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Leng Doesn't Linger - Whiff Still Pervades
The man who led two window companies to administration has not hung around - but the stink of the most recent pre-pack still sticks as David Leng quits Customade.
In his own words, published on April 14, Leng led Customade through a 'successful' refinancing process during the 2020 lockdown as Group CEO.
Many will not share Leng's definition of successful. Customade was sold to the financiers who already had the majority investment. Unfortunately that left suppliers hugely out of pocket (not least of which was Veka UK which in turn had to lay off workers) as their debts were not settled and hundreds of employees laid off.
Sysnseal
Leng had previously presided over the remarkably successful company Sysnseal - until it floundered and then foundered under his stewardship.
Although a new company (without Leng) Aperture bought the assets, the new owners could not reverse the decline and Aperture in turn went bust in March 2020 with its recently acquired assets being sold off to the Profine Group which retained what it wanted and then sold what was left to Ultraframe and Solar Calibre (which is owned by Solar Windows).
Customade Group
Over 800 jobs were saved as Nimbus, together with financing source Midcap Financial, agreed to buy the majority of the Customade Group out of administration in June 2020 and create a new group made up of Virtuoso Doors, Norwich PVCu, Stonehouse PVCu, Real Aluminium, Atlas, Fineline Aluminium and Stevenswood. The Customade Group name was retained.
However, two factories Polyframe Halifax and Polyframe Livingston both closed with employees claiming they didn't get notice nor fair payoffs.
Shunned
Companies which supply window manufactures rallied round to declare that would not re-engage in supplying the new edition of Customade. Publications refused to take group company advertising and the FIT Show refused to allow the Group or associates to exhibit at the forthcoming event.
Lockdown
Customade Group as it stood was the first set of window manufacturing companies to come out of lockdown 1. But the die had clearly already been cast - the Group was already in the throes of a pre-pack...despite Leng's protestations that it was the first lockdown that had pushed the Group over the edge.
Pre-pack
A pre-pack or a pre-pack administration is an instrument that allows a company not to go into a full public administration whereby any and many buyers are sought - and if none come forward with a realistic offer, the company is liquidated. Instead a single buyer for the company comes forward discreetly so as not to alert customers and suppliers and thus exacerbate the problem. That buyer tends to buy at a preferential rate. Often the buyer already has money invested in the company - and thus the purchase protects their interests. However, as the entity is still being purchased out of administration, the buyer can refuse to pay the debts of the 'old' company whilst still collecting monies owed to it.
Comment
There were many unsympathetic comments made about Customade. Social media gave vent to vitriol. Leng was attacked online.
What was said
The article referenced above includes the lines: 'more or less three hundred people lost their jobs as part of the Customade pre-pack deal. I’ve received dozens of messages from suppliers and employees left hanging. But the thing I find most appalling of all is that the company’s management have not taken a shred of responsibility for what has happened. The arrogance of it is breath taking'.
Arrogance?
On and of his departure, Leng said: “As we come out of lockdown, Customade Group is in good financial shape. Faced with the need for cash to restart the business after Covid, we had to restructure the business. After a huge refinancing process, when we reviewed all the options, we decided that Nimbus were the best choice to take the business forward. We restarted the business with real enthusiasm and support and I am delighted with the progress we have made given how difficult industry supply has been in these unusual times.
"Having successfully led the business through such an intense period of major transition, I believe that this is a natural time to hand the Chief Executive reins over. I have decided, not without regret, to step down as CEO of Customade. I will remain a shareholder and firm friend of the business and look forward to seeing it grow from the strong base it now has."
Steadied ship?
Questions will hang over the Customade Group as it lacks support from much of the market. However, it has made good strides as it moved factories, expanded capacity and improved performance; opened new Stevenswood depots and closed some depots described as 'poor'.
The firm has hired new transport fleets, upgraded its IT systems, built new websites, launched new products - and nailed down its credit control. Leng claims the company is in a good cash position.
He also claims customers and suppliers have remained loyal! Whilst boasting a full order book.
Nimbus - nimble or ruthless?
Nimbus remains the majority owner of the Customade Group. Nimbus is an experienced investor in manufacturing with a track record in supporting management teams to build businesses that can be sold on as quickly as is possible.
Nimbus secured its interests efficiently via the pre-pack. Nimbus will want its interests served immediately. The challenge and the chalice has been left vacant.
Picture: David Leng.
Article written by Cathryn Ellis
15th April 2021