Debt Management specialist Fairpoint Group has entered administration. In an announcement to the London Stock Exchange, Fairpoint Group Plc said it could no longer manage the £1m annual rent for the company’s head office.
The company has given reassurances about the future of its legal services business, which employs more than 500 people across the UK, following a £5m loan from financiers Doorway Capital Limited last month.
Fairpoint issued the following statement on Friday: “On 3rd July, Fairpoint announced that AIB Group (UK) (“AIB”) had assigned its debt due from Fairpoint to Doorway Capital Limited and that, in conjunction with the assignment of debt, Doorway had provided a Receivables Funding Facility of up to £5 million to Simpson Millar LLP, the Group’s wholly owned Legal Services business.
The Board believes that this new Facility provided by Doorway will enable Simpson Millar and its subsidiaries (the “Legal Businesses”) to continue to trade as going concerns and take advantage of the growth opportunity presented by the size and highly fragmented nature of the consumer legal services marketplace.
However, ongoing support for the Group’s subsidiaries outside of the Legal Businesses is made more difficult due to the existence of the onerous lease on the Group’s head office which has an annual commitment of c£1m per annum for a further 4 years. As a result, and following detailed discussions and the evaluation of a number of options, the Board has concluded that the holding company of the Group, Fairpoint Group plc, is no longer able to continue trading as a going concern and has filed notice of intention to appoint administrators.
Unless financial circumstances change, and in accordance with statutory requirements, the Board intends to appoint administrators within 10 business days. The secured creditor can, however, appoint administrators without the requirement for notice.
The Board do not expect this announcement to have a material impact on the planned disposal of the IVA and Claims divisions to a third party, as previously announced on 12 July 2017.”
Fairpoint is the third high profile debt management to enter insolvency within the past six months. Just last month Baines & Ernst was acquired by Moneyplus Group after entering administration,
Back in April debt management firm Debt Release Direct (DRD) also ceased trading. Invocas Group also entered administration during the same month with David Rubin & Partners appointed as Joint Administrators