In this video interview, posted on rival news site Info4security.com, Barry Shakespeare of Norbain SD Ltd answers a few questions about the liquidation of Norbain and subsequent sale of Norbain SD to Newbury investments.
In answering the questions from Info4security, Shakespeare was allowed to skate around the question that is surely the elephant in the room: What happens to the creditors?
In our article posted two days ago, Norbain administration: Questions answered… or not, we asked that very question. We have also put those questions to Norbain SD and haven’t received an answer yet.
Norbain also wrote an FAQ regarding the acquisition which also failed to answer the question of what happens to the creditors.
In the video above, Shakespeare is quite happy to talk about the benefits of the pre-pack: the banks were satisfied, the company continues to trade and all the employees were transferred to the new company, preserving around 250 jobs including Shakespeare’s.
Watching Shakespeare’s performance on YouTube, a number of questions arise:
He says Norbain Group was cash flow positive, but earlier this year the banks called in their loans to Norbain Group, the holding company for Norbain SD Ltd and three other companies operating overseas under the Norbain name.
Question: When precisely did the banks ask for their money back?
The board of Norbain Group began working with KPMG to assess the value of the assets of the company which included the UK company, Norbain SD Ltd. That resulted in offers for Norbain SD including an offer from Newbury Investments. The banks were “minded to accept” the offer from Newbury which was followed by the separation of the Norbain SD assets from the Norbain Group and subsequent sale to Newbury Investments.
Questions: When was it decided to separate the assets of Norbain SD Ltd from the Group? Who else bid for Norbain SD Ltd’s assets? Did anyone offer to take over Norbain Group as a going concern, including the assets and debt?
Shakespeare explains that the pre-pack agreement to sell Norbain SD meant that the administrators, KPMG, had to dispose of the assets of Norbain SD differently from the rest of the Group. However, he doesn’t mention the creditors or the fact that the pre-pack agreement allowed Newbury Investments to acquire the assets minus the debts, thus neatly shedding millions of pounds of excess baggage.
Question: How much will creditors realise from the liquidation of Norbain Group?
Shakespeare then says: “One of the other questions I’m asked is exactly how much before the time this took place did anyone know it was going to happen, or how long did it take between going into administration and coming out into the hands of Newbury. I can absolutely say that the data that will be provided by KPMG will signify that the actual time the business was in administration was a matter of hours which is merely the core process to put something into administration and then to take it out of – in accepting a sale to Newbury.”
Question: Shakespeare poses a question here but then fails to answer it, namely, when did the directors realise that administration was inevitable?
Barry continues to pose questions that he then doesn’t answer: “Another question I’ve been asked is, isn’t this a phoenix rising from the ashes scenario where the same people are running the business and therefore why was the process of pre-packaged required? Well, absolutely, you’re looking at me, I ran Norbain SD Ltd before and I still run Norbain SD Ltd now. But the owners of the company now are Newbury Investments, not the banks and equally there is no group structure between SD Ltd and the owners Newbury. So our Group organisation has been completely dissolved as well as obviously the banks now have no interest in running the business. So well it is still Norbain SD Ltd, the name is the same, the company entity has changed, and our VAT and bank account details have changed, but the management of the company as well as all of the employees of the company have transferred into the new business under UK employment regulations. And that’s why we look the same but our ownership is entirely different.”
Question: Phoenix from the flames is a good description and surely one that many of old Norbain’s trade creditors will be using. Shakespeare poses the question, “why was the process of pre-packaged required?” but then answers a different question. So our question to him, and the directors of the company and KPMG is the same question: “Why exactly was the process of pre-packaged administration required?”
This video was clearly aimed at reassuring customers that nothing has changed at Norbain SD Ltd, but does nothing to reassure the trade creditors that anything is being done to look out for their interests.
Customers can look forward to seeing the same faces at Norbain because, as Shakespeare indicated, they have all been TUPE transferred to the newco. While this is a good outcome for them, you can be fairly certain that this was not the issue that was at the forefront of the minds of the banks or the directors of Norbain Group who would have been looking for the best way to get their money out of the old company and minimise the subsequent fallout.
However, while Shakespeare addressed the continuity of management and customer services, some customers will be concerned that he didn’t address the issue of continuity of supply. Will they still be able to buy the brands that they used to get from old Norbain?
And the continuation of warranties has become an issue with at least one company, Dedicated Micros, declaring that they were withdrawing their warranty from Norbain. UPDATE: Dedicated Micros announces it will distribute its products through rival security distributor Midwich Security
The continuity of supply will only become apparent as we find out which manufacturers will continue to sell product to the new company. Some companies will decide that, after nursing the wounds acquired from their relationship with the old company, they can’t afford to ignore the newco, while others will decide now is a good time to take a break from Norbain and nurture relationships with other distributors.
Meanwhile, with millions of pounds taken out of the security industry, some companies will surely go to the wall as a result of the Norbain collapse.
Look out for further acquisitions, administrations and pre-packs over the coming year as the Norbain debt crisis works its way through the industry.