Car parts manufacturer Grorud Engineering has officially entered liquidation after failing to keep up with payments to creditors.
The Consett company closed last year after losing a major contract with Japanese airbag manufacturer Takata, a move which led to the loss of 130 jobs.
Grorud’s factory gates were shut after it entered a Compulsory Voluntary Arrangement (CVA), a form of insolvency that means firms do not have to pay redundancies. Instead, redundancy payments to staff are paid by the Government.
The arrangement was supported by Grorud’s managing director George Lambert, who wrote to staff to tell them that entering into a CVA was “the best option to expediate payment of monies owed” to those made redundant.
Documents published on Companies House show Grorud has gone into liquidation, having failed to keep up its CVA commitments because it was no longer trading.
When the liquidation was filed Grorud owed creditors a total of £1.77m, with the list of company creditors including £114,000 owed to HMRC and £663,886 owed to 98 former employees.
Andy Whelan, a partner at Business advisory firm WSM Marks Bloom, has been appointed as the company’s liquidator.
In a document outlining the termination of the voluntary arrangement, Mr Whelan said: “The CVA, as approved by creditors on April 10 2017, anticipated that the company would pay monthly contributions for five years from May 2017, starting at £3,000 per month for the first year.
“The anticipated return to creditors was 100p in the pound on preferential claims and 13.3p in the pound on unsecured claims.
“Contributions fell more than three months in arrears on October 31 2017. I therefore issued a Notice of Breach to the Company on November 2 2017, which gave it 60 days to remedy the breach. In fact, by that stage the Company had ceased trading, and was unable to remedy the breach.
“The director of the company ultimately instructed me on December 20 2017, to assist with placing the Company into creditors’ voluntary liquidation, and the company entered the liquidation on 23 January 2018.
“Consequently, I am terminating the CVA.
“Two month contributions of £3,000 were paid into the CVA. The last contribution was received on July 5 2017, in respect of the June 2017 contribution.”
Grorud’s reason for closing was controversial at the time, with Mr Lambert blaming the firm’s collapse on Takata cancelling a major contract.
The Japanese manufacturer had been involved in a major scandal around the time, which saw it receive a $1bn fine in the US for concealing defects in its airbags.
However, a Takata spokesman said the cancelled Grorud contract had nothing to do with the scandal but because of the Consett firm’s “significant price rise”, blaming Grorud for “excessive and causeless changes to the contract agreements to the disadvantage of Takata”.
Source : Chroniclelive