| New Norbain paying "compensation" to a select number of creditors |
Following the Administration and pre-pack sale of Norbain, it is now apparent that the new company (also called “Norbain”) has been paying “compensation” to some suppliers for the debts owed by the old company. However, it is cherry picking which suppliers it chooses to compensate – some have received a significant proportion of their debt with old Norbain, while others have received nothing.
Discussion with many of the manufacturers distributed by Norbain reveals that most manufacturers have been offered no compensation other than for new Norbain to buy existing stock which legally still belongs to the manufacturers anyway.However, it has been confirmed that a number of manufacturers who were unsecured creditors of the old Norbain have received significant “compensation” from new Norbain. Traditionally, when a company goes under, if unsecured creditors are paid, they receive an equal proportion / percentage of money owed. With bank debt of £50 million, and the only remaining significant asset being a sales ledger worth around £15 million, the £23.5 million paid by Newbury Investments will go nowhere near generating sufficient funds for unsecured creditors of Norbain to receive any money from Administrators KPMG. (It is highly unlikely that the sale of the old Norbain’s non-UK assets will generate significant funds to plug the gap).
New Norbain is cherry picking which suppliers it chooses to compensate |
Specifically, it has been reported that Paxton were owed around £1.5 million in stock and unpaid invoices. Paxton’s emphatic show of support for Norbain in their press release of Friday 6 July – “Paxton and Norbain stand firm together for a bright future” – would suggest a generous settlement.
Arbitrary compensation to creditors?
It is unclear what criteria are being applied to decide who is paid “compensation”. One manufacturer has speculated that it seems to be an arbitrary combination of what are deemed to be key supplier relationships and what they can get away with to secure a credible future business.
Norbain has not commented, been available for comment, nor sought to clarify these circumstances. Paxton boss Adam Stroud declined to comment on the matter.