FRP Advisory report shows Change Recruitment £10m in debt at time of Atkinson rescue

FRP Advisory has revealed that defunct Glasgow-based Change Recruitment left debts totalling nearly £10 million to a series of creditors including Clydesdale Bank, Glasgow City Council and City of Edinburgh Council when it was bought out of administration last month by venture capitalist Paul Atkinson.

According to a report from joint administrators Tom MacLennan and Iain Fraser of FRP, the company was £6.4 million in debt to private equity firm and majority-stake owner Stage Capital as of April this year, a month before Mr Atkinson’s Head Group, bought its business and assets on the day it entered administration.

Stage had previously acquired the debt held by NBGI Private Equity, which had backed a £14 million management buyout of Change in 2006.

Last month’s deal with Mr Atkinson, which was concluded for a price of £1 and rescued all sixty jobs at the stricken firm also included amounts due to unsecured creditors.

It had run into difficulty because of a downturn in business activity, leading to problems generating cash.

FRP said secured creditor Clydesdale Bank was owed £3.2 million in April, including a term loan of £1.85 million and an invoice discounting liability of £1.36 million. The bank faces a shortfall of £1.48 million.

The report shows unsecured creditors face a shortfall of more than £3.2 million.

The total owed to unsecured creditors was £1.7 million, including a debt of nearly £1.6m to HMRC.

Other creditors included Glasgow City Council, which was owed nearly £53,000, City of Edinburgh Council, owed more than £43,500.

“Stage Capital had appointed an external consultant during 2016 to advise on business improvements and assist with discussions regarding a potential sale/merger of the business however no deals were progressed beyond initial discussions,” the administrators said.