“[Barry] Shakespeare poses a question here but then fails to answer it, namely, when did the directors realise that administration was inevitable?”
A recent comment on my previous post regarding Norbain has refocused my attention on the topic. Before I respond to it however, I should probably fill-in the timeline since I posted last:
- SourceSecurity reported that Norbain was paying suppliers on an individual, discretionary basis. We ended up being somewhat beneficiaries of that process (I guess Norbain consider us useful for some reason).
- Norbain released a text FAQ and a video one that raise more questions than they answer.
- Mid-September, Barry Shakespeare left Norbain. I haven’t seen any announcement of a replacement.
Now the more I look into this, the less clear I am on what actually happened on that fateful day in June. Part of my confusion rests on the structure of the pre-administration company. Norbain SD Ltd (the UK arm that was sold to Newbury) were a subsidiary of a holding company, Norbain Group Ltd (now apparently called NSD Realisations 2012 and NG Realisations 2012, respectively). Norbain Group as a whole were apparently making serious losses, but in the video FAQ, Shakespeare claims that Norbain SD (ie the UK arm) were “profitable as well as cash-flow positive for some considerable time”.
That then raises the question of how Norbain SD couldn’t be sold whole as a going concern. Why was an administration necessary? Shakespeare speaks of banks calling in Norbain Group’s debts, but why and how does that trigger the administration of a profitable subsidiary as well? There’s something missing here.
Thus onto the anonymous comment (I suspect that the commenter is a Norbain employee):
Norbain SD Ltd found out at the exactly same time as its creditors that it had gone into administration, that’s why orders were made up to that point. No one knew except the holding company that has now been dissolved and members have left the company.
I don’t see how that’s possible. SD Ltd, while owned by Group Ltd, was a separate legal entity. It can’t just suddenly ‘find out’ that it’s in administration of any kind, let alone a pre-pack. While I accept that most Norbain staff were probably unaware (as is common in administrations) I find it ludicrous to suggest that management such as Shakespeare was in the dark.
As for asking for their shipping costs back the team can’t just show their new owners that they are lapsing on their accounting now that their future is in doubt.
This, to me, illustrates my point. Who made the decision that, having just told everyone that you’ve done a pre-pack (and btw suppliers, we aren’t paying you), that the most important thing to do is to chase £15 from a supplier you’ve just effectively robbed? What message does that send Norbain’s suppliers? If instructions to do that came from the new owners, then Norbain is in even more trouble then we thought. If staff independently decided that ticking off suppliers even more than they already were was the best way to impress the new owners, then they have screws loose. The great threat to Norbain now is that suppliers will not want to supply them. When suppliers are, quite rightly, upset at you is NOT the time to be so nit-picky.