It has emerged that creditors of Edinburgh-based refrigerator supplier Capital Cooling are “highly unlikely” to receive their dividend after the refrigeration specialist was saved from administration last month.
Capital Cooling, which first announced administration on 22 December, was rescued from insolvency thanks to a pre-pack administration deal brokered by auditor KPMG.
Private investor Rcapital bought the business for £300,000, but Capital’s service division was closed during the process.
The firm owes nearly £2m to its unsecured creditors, with insolvency administrator KPMG reportedly sceptical that it will be able to provide adequate funding for dividends.
Major foodservice equipment manufacturers and suppliers who are creditors include:
East Anglian Installation Systems (EAIS), £2,938.80
Electrolux Professional, £3,209.33
First Choice Catering Spares, £8,402.91
Foodservice Equipment Marketing (FEM), £646.04
Foster Refrigerator, £61,447.89
Foster Coldstores, £1,464
Hubbard Ice Systems, £13,900.29
Ice Machines UK, £545.54
Precision Refrigeration, £192.24
Project Distribution (Prodis), £7,752.00
Taylor UK, £147.52
Williams Refrigeration, £1,896.31
However, it has been reported that the most substantial loss could be for Turkish manufacturer Nurdil Coolers, which is owed £1.03m of the total.
A spokesperson from KPMG said in the Joint Administrators proposals report: “At present it is uncertain whether there will be sufficient funds available to enable a dividend to preferential creditors. Any potential dividend will be dependent on the level of asset realisations, the costs of the administration process and the final level of preferential claims.
“Based on current estimates, it is highly unlikely there will be a dividend to unsecured creditors.”
Founded in 1996, Capital Cooling designs, manufactures, sells, delivers and installs refrigeration equipment. The company began facing significant cash flow challenges in the 18 month period ended 30 June 2017, during which it posted turnover of £24.7m, with a loss before tax of £5.4m.
The administration announcement saw over 60 redundancies and debts of £6m. The announcement on the firm’s website stated: “Following a strategic review of the business, the directors of Capital Cooling have commenced a restructuring. This is being supported by a new, external partner.”
The statement continued: “Capital Cooling’s core business is a strong, profitable and well-run business, with a long history of providing the commercial refrigeration to its customers and a well-respected brand in the UK. However, the service division has suffered due to difficult trading conditions and strong competition in the market.
“The medium-term outlook is that these specific service division-related difficulties will continue, and hence these services will be wound down. The restructuring will make Capital Cooling a stronger and more focused business for the future, which is able to invest in its core businesses.”