11:37 am, September 29, 2023
A franchised car dealership which fell into administration after finding a £3.7m stock discrepancy has failed to find a buyer and is now making staff redundant.
Car Dealer reported last month that CMS Kidderminster had called in professional advisers after directors found an unexplained discrepancy of £3,689,292 in its latest accounts.
The following week, the firm officially appointed administrators and has now begun the process of winding down its operations.
The Kidderminster Shuttle reports that the dealership’s sales and fleet operations have both now ceased trading.
While the outfit is continuing to operate a maintenance and repairs service for the time being, the majority of its 46 employees have now been made redundant.
Local news reports also state that only a small number of staff have been kept on, in order to help the administrators carry out their work.
Commenting on the latest developments, Tony Wright, partner at FRP and joint administrator of CMS, said: ‘Despite efforts to find a suitable buyer to take the business forward, there was no prospect of a sale.
‘With regret, this means that we have begun to close down its operations and have made the majority of staff redundant.
‘Our team is working with impacted staff in making claims to the redundancy payments service.’
CMS’s issues began with the publication of its annual accounts for the year ending December 31, 2021.
The documents state that the Vauxhall dealer made a pre-tax profit of £487,475 following a £79,295 loss the year before.
That was on a turnover of £94.3m versus £83.5m in 2020. It received £36,794 and £195,838 in government grants in 2021 and 2020 respectively.
But in the accompanying strategic report, under a section entitled ‘Stock discrepancy’, the board says that before the 2021 year-end audit, the directors found ‘un unexplained discrepancy of £3,689,292 in the accounts in relation to a stock contra account that they were unable to reconcile as at 31 December 2021’.
The report added: ‘The directors are continuing to investigate the stock difference and have engaged with professional advisors in order to determine the proper accounting treatment.’
