8:51 am, July 26, 2024
A used car dealer that went pop with debts totalling nearly £7m owed vehicle funding firm Haydock a staggering £1.88m.
Brymo Limited – trading as Sentinel Cars – has been placed into administration with a plethora of funding firms, banks and staff owed millions of pounds in total.
At the time of the administration, the company was run by directors Matthew Worton and Stephen Nicholls. The pair owned 55% and 36.36% of the shares respectively.
The London-based used car dealer, located on Seven Sisters Road, was formerly a Volvo new car franchise but lost that in 2022 when it flipped its business to start selling used cars only.
Joint administrators Paul Zalkin and Andrew Hosking, of Quantuma Advisory, were appointed in February and have found the car dealer owes millions to creditors.
Finance creditors – including Haydock, Evolution Finance, Northridge Finance and NextGear Capital – are all listed as being owed funds by the used car dealer.
Haydock is said to be owed £1.8m, NextGear Capital is owed £635k and Northridge Finance £1k.
Administrators have not been able to estimate how much Evolution Finance is owed yet.
HSBC bank is owed £269,830 and Arkle Finance is owed £509,583. Both are secured creditors against the business.
Staff are waiting on £145,744 in total, but only £18,131 of that is as preferential creditors, while administrators have not been able to estimate how much the tax man is due.
In total, trade and expense creditors are owed £2.5m, finance creditors £3.38m and secured creditors £779k.
The total estimated deficiency as regards creditors comes in at £6.963m.
The administrators’ report says the company’s Volvo franchise was terminated in December 2022 and the firm continued to operate as a second-hand dealership specialising in the sale and servicing of Volvos.
The company traded profitably from the year ending December 31, 2014 up to the end of December 2021, but its finances took a hit in October 2022 when Volvo said it was to withdraw its franchise agreement and all lines of credit associated with it.
The report said: ‘The company experienced a downturn in trade because customers were reluctant to purchase used vehicles at premium prices and the company struggled to acquire stock at sufficiently competitive prices to maintain profit margins.
‘Once the Volvo franchise agreement was terminated, the company secured alternative stock and working capital funding facilities from a range of providers.
‘The company fully utilised unit stocking funding facilities when used car prices were at an all-time high.
‘However, as the production and supply constraints for new vehicles lifted, the value of second-hand vehicles declined significantly.
‘The company therefore suffered from an unsustainable contraction in the value of the equity in its inventory of vehicles and started to rely upon alternative finance for working capital.
‘Due to the associated costs and the outstanding liabilities on finance agreements, the company was unable to reduce its cost base and return the company to profit. Sales also declined and by early 2024 the company was struggling to meet payment obligations to the creditors.’
Directors contacted Quantuma in February and engaged the company later that month.
On February 12, one of the finance firms attended the used car dealer’s premises without notice and collected vehicles.
‘In response, the directors concluded that the company could not continue to trade and should cease trading immediately,’ said the report.
The administrators added: ‘[We] are aware of concerns regarding the circumstances leading to the company’s failure and are continuing investigations.
‘Further details will not be provided until it is appropriate to do so. To the extent required, reports will be submitted to the appropriate authorities and action taken accordingly.’
Administrators believe that in the case of most creditors it is unlikely a dividend will be payable.
Sentinel Cars directors Worton and Nicholls ran another dealership – Braydon Motor Co – that went into liquidation in 2017.
Last week, Car Dealer reported Haydock Vehicle Funding was withdrawing from the motor trade.
A spokesperson for the lender said: ‘Following a review, we have taken the strategic decision to wind down our stocking facility to focus on other growth opportunities across the business.
‘During this wind-down, our team is working closely with our dealers to manage orderly exits and helping them to find alternatives. We obviously can’t comment on individual exposures.’
Pic: Google Street View
