Workers at the aircraft maintenance company ATC Lasham were today told that the company was in administration and they were being made redundant with immediate effect. The administrators from Grant Thornton said the business had “no option” but to close down. The firm had a turnover of £48m but the expected increase in orders in the last quarter had failed to materialize and so the current losses that the business was racking up were just going to get worse.
Nigel Morrison, at Grant Thornton, said: "The business is long standing with a highly skilled workforce and strong reputation in the industry. However, given the losses and lack of future orders the directors reached the conclusion they had no option but to proceed with the appointment of administrators.
"Given the low levels of current activity, it is no longer viable to keep the company in operation following our appointment. We have therefore unfortunately had to make a significant level of staff redundant although we have retained sufficient employees to keep necessary industry approvals in place and to deal with administrative matters." It is expected that over a 100 jobs will be lost.
It is always tough when employees seem to be the last to know that a business is in difficulty and then suddenly are made redundant. The reasons are mainly due to the restrictions placed on companies by the insolvency act 1986 and the reality of the situation. Once a company cannot pay its bills the duty of the directors switches to the creditors and they cannot allow the creditors position to get worse or they could be held personally liable. Also creditors who have security over the assets of the company such as their banks can basically "pull the plug" if they think their lend is at risk.
The other practicalities are simply that if knowledge of problems gets into the market then some creditors can take actions that prejudice others creditors such as withdrawing supply and credit. This was one of the reasons why pre pack administrations were popular in the past as it allowed a business to continue to trade in the event of a very aggressive creditor.