Ipswich: Bad debt played key role in ASD collapse
A MAJOR bad debt, loss of contracts and the economic downturn all contributed to the failure of clothing company ASD (Europe), a report to creditors says.
The firm, based in Princes Street, Ipswich, collapsed at the end of last month, owing more than �2.1million to creditors.
The firm never recovered from losses it made when an associated company, TSC Leisure Ltd, a clothing manufacturer, went into administration in 2010, owing it about �2m, joint liquidator Steven Law of Ensors said.
ASD (Europe) designed and supplied sportswear and clothing, including past Ipswich Town kits.
But it was badly hit by the general economic downturn in 2009, and while it tried to revive its fortunes over the following two years, it was ultimately unable to withstand the financial pressures it was under, said Mr Law.
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It is thought the firm employed fewer than 20 staff when it decided to go into voluntary liquidation at a board meeting at the end of September.
During September last year, it had sought financial advice and entered a cost-cutting programme. Efforts to turn the business around continued, and it secured a Tesco ski wear contract for winter 2011, but without its bank’s support it was unable to accept the order. In May, the cost-cutting continued and a number of staff left the business.
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Mr Law and Mark Upton, of Ensors, were appointed joint liquidators at a creditors’ meeting last week.
“It was hoped with these savings the company could survive,” the report to creditors says.
But disappointing sales added to the pressure, and Mr Law was approached to discuss the company’s position. After talks with director Neil Farrar, it was agreed the company should be placed in voluntary liquidation.
“The general economic downturn in 2009 had a significant effect on the company and continuing trading difficulties hampered new account growth for the business,” the report states.
“Over the last 12 months, the company has endeavoured to secure additional new business, but with the severity of the general economic downturn in conjunction with the tripling of raw material costs, has proved unsuccessful.”
Mr Law said the �2m bad debt from the associated company, TSC Leisure, had hampered its recovery. “At the end of the day, it scaled back, it did everything it could, but it was just too great a loss to recover from,” he added.
ASD (Europe) was set up in 1997 and designed and supplied men’s, women’s and children’s clothing, including performance sportwear and corporate wear.
Major clients included Umbro, Ellese, Adidas, Tesco, Asda, Sports Direct and JJB. It also helped design and manage the manufacture of Ipswich Town’s Punch-branded kit for five years until the club switched to Mitre in 2006.