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Plane sale nets cash for Airedale creditors

By Laurence Kilgannon, Assistant Digital News Editor

Secured creditors of Airedale Mechanical & Electrical have been boosted after administrators from KPMG agreed deals for key assets, including a plane formerly owned by the contracting business.

But unsecured creditors, initially expected to recover some of the millions owed to them, are now likely to lose out completely, an update into the administration has revealed.

The £66m-turnover company's collapse in 2012 was one of the biggest building services industry failures in recent years.

Falling profitability as a result of margin pressures in the construction industry and liabilities for cross guarantees of £1.7m relating to subsidiary Airedale Electrical, which entered administration in May 2012, contributed to severe cash flow difficulties at Yeadon-based Airedale Mechanical & Electrical.

The company had also been issued with a winding-up petition by the time David Costley-Wood, Howard Smith and Mark Firmin of KPMG were appointed as joint administrators in July 2012 and 135 employees were made redundant after it was decided the business could not continue to trade.

Now, a progress report into the administration has revealed that deals have been agreed for Airedale M&E's Yeadon headquarters and a plane used by directors.

The head office was owned by Airedale M&E on a long leasehold basis and subject to a fixed charge in favour of Santander UK, which provided the company with a property loan and overdraft facility. Administrators have accepted a Santander-approved offer from an unnamed buyer for the property, advised by Jones Lang LaSalle .

Airedale also owned a Diamond Twin Star DA42 aircraft that was subject to a mortgage

in favour of Lombard North Central, which financed its purchase. Upon the appointment of administrators last July the outstanding balance due to Lombard was approximately £162,000.

The aircraft was initially located at Southend Airport following an emergency landing in May 2012. On the advice of surveyor Edward Symmons, which valued the aircraft in preparation for a sale, the administrators instructed aviation specialist Multiflight to carry out initial repairs, after which the aircraft was flown back to the Multiflight facility at Leeds Bradford International Airport for final repairs.

After a joint marketing campaign by Edward Symmons and Multiflight, administrators have accepted an offer of £250,000 for the aircraft, again from a currently unknown party.

The money raised will clear the amounts owed to Lombard, but other secured creditors, including Santander, will only discover the level of their recovery once KPMG has completed its asset sales.

Book debts totalling more than £9.3m are only expected to fetch between £88,000 and £323,000 because of debtors making counter claims, seeking to offset damages and exercising breach of contract and termination clauses, which KPMG said had eroded the value of the debtors' ledger.

Originally, administrators had hoped to make a payment to unsecured creditors, including trade creditors left out of pocket to the tune of £8.3m, but no distribution is now expected after less money was raised from asset sales than initially forecast.

A distribution to unsecured creditors via the prescribed part – a mechanism which ring fences cash that must be made available to unsecured creditors – remains a possibility but is dependent on the level of future asset realisations, which is currently uncertain.

Source: www.insidermedia.com
Category: Airedale

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