Creditors Face £8m Black Hole as Midlands Company Fails: Administrators Report

Creditors of failed Midlands company face £8m black hole

Creditors owed money by Cartwright King Solicitors, a failed Midlands company, are facing an £8m black hole, according to administrators from BDO. The firm, which was a leading legal aid provider with 11 offices, was put into administration just before Christmas and its assets and staff were transferred to AWH Acquisition Corp in a pre-pack deal.

The administrators’ report revealed that only £200,000 has been recouped so far, which is not enough to cover even the administrator’s costs, let alone the £8.22m owed to creditors. The firm’s bank, owed £5.1m, is the largest creditor, followed by HM Revenue & Customs, owed over £1.3m.

Unsecured creditors, whose claims have doubled from £878,000 to £1.75m, are unlikely to receive any dividend other than the prescribed part. Pre-administration costs and expenses, as well as time costs incurred during the administration period, have also added to the financial burden.

The administrators stated that the costs incurred were essential in maximizing asset realizations for the benefit of all creditors. The situation remains uncertain, with no guarantee of any distribution to creditors at this stage.

The collapse of Cartwright King Solicitors serves as a stark reminder of the risks faced by creditors when a company fails, highlighting the importance of due diligence and risk management in business transactions.