Watford Electronics left debts of £3.5m
Administrators hang on to stock
Watford Electronics’s stock remains in the hands of administrators, giving unsecured creditors hope of seeing some of the £3.5m they were owed when the firm collapsed earlier this week.
Watford's cards had been marked since November when it released a troubling set of accounts and trade insurers started putting the squeeze on its credit lines with suppliers.
But distributors were talking to the PC firm's directors about finding a way for it to trade out of its troubles even as recently as last weekend.
Watford's directors failed to return calls placed by The Register this week. However, the firm's financial controller told The Register on Monday that "business is normal" and "the rumours are not true".
But on Wednesday, Watford Electronics went into administration. At 3.30pm that same afternoon, according to a statement posted on the firm's Savastore website that day, a firm called Globally Ltd "purchased the business of Watford Electronics".
Globally had been established just days earlier, according to Companies House. Its registered address is Jessa House, 1 Finway, Luton. Watford Electronics/Savastore also operates from that address.
The Register has established that Globally did not buy Watford's stock and that what there is of it is expected to go a long way to paying creditors.
Unsecured creditors are owed in the region of £3.5m, and are dependent for any return on a condition administrators put on Globally's purchase of Watford and that holds Globally to pay more money to creditors if they have any success with their phoenix venture.
A statement from Watford’s administrators, Smith & Williamson, said: "Shortly after the Company entered Administration, we received an offer for the goodwill and chattel assets of the Company from Globally Limited."
"Following a review of the Company’s financial position, we concluded that there would be no benefit in continuing to trade through the Administration given the significant liabilities that the Administrator was likely to face."
Alasdair Manson who works for Smith & Williamson, confirmed that Globally had been allowed to buy “goodwill and chattel” assets of Watford Electronics for a "token" sum ".
“I've no doubt creditors will get value in due course on the basis that the stock still remains to be released and wasn't included in the deal," he said.
"Any deal that could have been completed by the administrator would have been linked to profitability going forward. If Globally makes a significant profits then additional monies will come back to the creditors," said Manson.
The writing first began appearing on the wall 11 November last year when Watford published its accounts for the year to 30 September 2005.
Though it had grown turnover 30 per cent to almost £50m and as still one of the best known names in the indigenous PC industry it made pre-tax profits of £122,675 After tax and amortization it made £51,800 - a 1 per cent profit margin.