Failed SFD collapse due to ‘malpractice’
Audit unearthed doubts after firm’s sale last summer
SHOPFITTINGS Direct (SFD), which produced window displays and floor designs for Primark and others, went under due to “business malpractice”, claims the investor that tried to save it.
A source close to venture capital group Elaghmore said that despite undertaking extensive due diligence, a number of “undisclosed issues” with SFD’S finances only came to light after it had acquired the business. It bought SFD last summer as a distressed asset.
The source added that the combination of these issues left Elaghmore with no option other than to put SFD into administration last month.
Administrator KPMG will present its initial findings to creditors before the end of the year.
It is understood that the “business malpractice” unearthed by the Elaghmore audit in October covered SFD’S order book and its treatment of invoices to clients like Primark. A spokesman for the retailer said: “We are aware of the allegations and an internal investigation is under way.”
Two thirds of SFD’S staff were made redundant when it went into administration and one former employee said: “Loads of us are still looking for jobs, it is going to be a tough Christmas.”
Suppliers to SFD were disappointed by its collapse as they had been given assurances good times were on their way after Elaghmore came on board.
One delivery company owner said he was owed more than £150,000 and “had no chance of seeing any of it again”. He added: “The staff have tried to help one another and customers with new leads and work. It is a massive blow.”
SFD was founded and run by Paul Brooks and his brother David in June 1998. Aside from Primark and Marks & Spencer, its clients are believed to have included H&M, Louis Vuitton, River Island and Coach. It had premises in New York, Melbourne, Prague and Shanghai.
In a statement, Brooks’ solicitors Gunnercooke said: “Paul Brooks is sad and disappointed about SFD’S demise and administration, which has impacted upon him personally and financially.
“He spent many years building up the company and feels deeply for any employees who have been adversely affected. Mr Brooks is currently in dispute with Elaghmore and has been advised by his lawyers not to discuss the details of that dispute in the public domain at this time.”
According to accounts filed at Companies House, David Brooks left the company at the end of 2016 after clashing with his brother on the direction of SFD.