Update 31st August 2011: Since posting this blog, as below, on the 1st August 2011 it appears that The Loft Shop has NOT gone into liquidation, but administration. However, liquidation may follow. The employees of the the business had been made redundant with liquidation given as the reason. As such the local press believed this also to be the case.
The Loft Shop that operated out of the Lineside Industrial Estate in Wick (East Sussex) has gone into liquidation. The firm had 19 stores across the country. Their website is still in operation and the directors have opened a new business doing the same thing in Chichester. This has angered many of the former employees as non of the former staff have been recruited at the new store. Does this sound fair?
As is often the case many people assume some wrong doing. So lets take some of these points and explain.
A director is perfectly entitled to start a new business if he was a director of a previous company that went into liquidation. However, there are strict rules in re-using the company name under section 216 of the insolvency act. Basically, you can't without leave of the court, which is very rare. This new shop uses a completely different name.
The director claimed that he had put in £350k of his own money to keep the business afloat after the credit crunch otherwise jobs would have been lost sooner. - This is something we do see and it will come out in the liquidation report how much he has put in as a creditor of the business. A liquidation report will be sent to the employees by the insolvency practitioner so they will be able to see for themselves.
With respect of the website it is often the case that this remains in place as it is an asset of the company that can be sold in order to try and get some monies for the creditors. In this case it looks as if the website has been bought by the new company, Kaysted Ltd, that is run by the former directors. They will have had to pay a fair market price for the website that would have been valued independently. However, in the circumstances it would have been lower than if the business was trading profitably. Perhaps it wasn't so crucial after all.