Press Report : LDV creditors set to receive less than 1p in £1
Jon Griffin, Birmingham Post, 21st October, 2009
Hundreds of creditors of van-maker LDV are set to receive “little or nothing” following its £75 million crash – with paltry dividends of less than 1p in the pound. Dealers, trade suppliers and other firms owed sums of up to six figures by the Birmingham van manufacturer have been warned they would receive scant compensation despite months of hopes of a resumption of production.
A new firm, owned by Chinese businesswoman Dr. Qu Li, exchanged contracts to buy the assets of LDV last week with plans to relaunch the van maker – probably at Longbridge – under the Eco Concept Limited banner.
However, Rob Hunt of Administrators PricewaterhouseCoopers said a maximum of £600,000 – and possibly less – would be made available for creditors owed sums totalling many millions of pounds following the collapse of LDV in early-June with debts of £75 million. “It is a pretty modest sum of money in the context of the creditor claims. Unsecured creditors are going to get little or nothing,” he said. “It will be at least nine to 12 months before creditors see that return – there are a lot of claims.”
Creditors who have lodged claims with PwC include Dana Spicer Axle Europe of Witton, owed £684,111, law firm DLA Piper of Birmingham, owed £184,000 and Sonas Automotive of Tyseley, owed £204,989. Meanwhile, secured creditors – including banks Barclays, Lloyds and HSBC – have been warned they will not be paid in full. Many of the 900 former LDV workers with preferential creditor status have been dealt with under statutory Government procedures, receiving money for holiday and arrears pay.
The likely shareouts of less than a penny in the pound will see dozens of dealers out of pocket, including 70 new vehicle sales dealers and 160 repair, service and spare parts suppliers. In June, the LDV Dealers Association revealed that unpaid debts from the stricken company ran into many millions of pounds.
A maximum of £600,000 is a pretty modest sum of money in the context of the creditor claims. Unsecured creditors are going to get little or nothing. It will be at least nine to 12 months before creditors see that return – there are a lot of claims.” Rob Hunt of PricewaterhouseCoopers, Administrator, LDV Group Limited
Dealers were also told by the Administrators that warranty repairs would not be recompensed, including work on vehicles sold before the van-maker’s collapse in early June. Meanwhile, around 200 employees at dealerships across Europe were forced to work for nothing, with staff in Holland, Belgium, Spain, Denmark, Poland and France seeing wages dry up completely.
Mr Hunt said a potential sum of £600,000 could be made available for creditors under a “Prescribed Part” procedure used in insolvencies involving sale of stock – but warned the figure could be less. “It is a calculated sum but the maximum it can ever be is £600,000. It could be half that figure, it could be nil,” he said and added that five workers had been made redundant following the sale of the assets, with around 25 remaining at the Washwood Heath factory maintaining the infrastructure of the site and for security purposes.
The sale of LDV’s assets to Dr. Qu Li’s Eco Concept Limited ends more than a century of manufacturing at Washwood Heath, and spells doom for hundreds of West Midland jobs. Fears are increasing that van production could eventually be sacrificed to China in a “lift and shift” operation similar to MG UK at Longbridge, now owned by Shanghai Automotive Industry Corporation.
Eco Concept Limited plans to start a company producing and assembling low-volume specialist light commercial vehicles. It is hoped vehicle trials will begin within 18 months. About 200 staff are to be employed at the new business, which is likely to be relocated to Longbridge, currently home of SAIC-owned MG UK.
[Source: Birmingham Post]