Creditors Unhappy Over ES Group

Creditors of the now defunct UK-based trucking and staging company ES Group are far from happy about the way it was split up and sold, claiming it was a “pre-pack” agreement that didn’t do them any favours.

The sales of the trucking and the stage-building divisions of ES were announced Feb. 25, a day after the parent company was put into administration with debts approaching £6 million.

At press time insolvency experts PKF were calculating the value of ES Group’s assets and liabilities and there was no indication of what percentage of its debt can be honoured. While creditors are left on tenterhooks, the two separate divisions of ES have risen phoenix-like from the ashes.

“It’s scandalous,” said one creditor who claims his firm is owed £759,000. He only spoke on condition of anonymity and said he was in talks with other creditors who are considering taking action.

“It’s too early to say who we are or what we’ll be doing, but we’ll be doing everything in our power,” he said.

He said the options included taking action against ES Group directors for the way they’ve conducted business and seeking a full explanation from the administrator. He claims many of those owed money feel PKF didn’t get the best value from ES when it came to disposing of its parts.

Graham Shaw of Show Stars, Dave Withey of Arena Group and Matt Wright of Rock-It Cargo have all admitted their companies are owed substantial amounts by ES Group but said it was too early to say what they’ll be doing about it.

Another of the main UK creditors is HSBC, which held a debenture – or “floating charge” – over ES Group.

The company took a big financial hit on a major project in Doha and wasn’t trading well enough to recover.

Withey, whose company was in a joint venture with ES mainly set up to secure Commonwealth and Olympic Games contracts, says the partnership is over and Arena Group will put in its own tenders for work relating to next year’s Olympics.

Steve Holgate from insolvency experts PKF says he’s not aware of any creditors’ revolt and the only correspondence he’s received from creditors was detailing how much they’re owed by ES.

On March 1 he and PKF colleagues Philip Long and Brian Hamblin sent a note to creditors explaining they’d been appointed administrators Feb. 24, the same day the sales took place, and detailing how ES had been split and sold.

ES directors, who were already receiving advice direct from corporate restructuring experts Begbies Traynor, had been canvassing for potential buyers for several weeks.

The PKF statement said the matter was resolved quickly so that the two parts of what was ES could be in place to meet tendering deadlines set by the Olympic Delivery Agency and the London Organising Committee Of The Olympic and Paralympic Games.

ES Group’s trucking business was sold to Suffolk-based Transam, which paid a so far undisclosed sum for 20 trucks, 30 trailers, and whatever goodwill the cash-strapped company still has.

“We put in a bid and I understand there were other bids,” Transam chief Mark Guterres explained. “I suppose we must have offered more than the others because our bid was successful.”

Del Roll and Ollie Kite, who have been running ES Group’s trucking, are moving to take up similar positions at Transam. Guteress said a total of eight ES staff will be moving to his company.

The staging and special projects business has gone to a new company called ES Global Ltd., which was incorporated Feb. 11, two weeks before ES Group was placed in administration.

ES Global is a consortium headed by Dubai-based Al Laith and the UK’s Serious Stages.

The directors are Tony Nobbs from Al Laith, former SGB Eventlink managing director Eugene O’Doherty, Shane Gerard from Atlantic Staging, and Serious chief Steven Corfield.

In 2002 Corfield’s Serious Structures tanked with debts of about £786,000.

The company’s voluntary liquidation caused controversy in the production and supply businesses when it was discovered the group’s assets were owned by parent company Serious Stages.

A third company called Serious Installations Ltd., which was set up in 2001 and mothballed until a month before Serious Structures went down, took on the role previously carried out by the bankrupt company.

A pre-pack agreement can enable a troubled company to negotiate the sale of its various businesses and then inform the administrator of the potential interest as it places itself in receivership.

Such pre-packed deals are legal but can also be annoying to creditors who don’t get anything near to what they’re owed, while those who ran the company that went into receivership move on to a similar job with the new company that bought part of it.

There have been examples of directors selling a cash-strapped company to relatives and then carry on running it for them.