Newbury: Telecoms firm sold out of administration

Jobs at a troubled telecoms firm in southern England have been safeguarded after being sold out of administration through insolvency specialist Smith & Williamson.

A newly-formed company, under the umbrella of a larger and unrelated telecoms group, acquired the telephony maintenance contracts for 380 businesses and organisations in central southern England from Redcare Telecom Ltd.

The sale of Redcare Telecom Ltd, based in Newbury, Berkshire, was through joint administrators Greg Palfrey and Steve Adshead, from the south coast office of accountancy and financial services group Smith & Williamson.

With the acquisition of the maintenance contracts arm by the new owner, which will be known as Redcare 5G Limited, 13 out of 14 RTL employees were saved from redundancy and remain in the same office.

It must be stressed that Redcare Telecom should not be confused in any way with BT Redcare, an unrelated market-leading specialist in secure, monitored communications services.

Palfrey heads up Smith & Williamson’s restructuring and recovery services department for regional offices and is based at the Southampton office.

He said the deal involved a pre-pack sale, ensuring that as many jobs as possible were saved and minimising the number of new claims that would have arisen in a liquidation; the remaining creditors would have more of the pot to share.

Palfrey added: “The pre-pack was triggered by the proposed purchaser, an independent with no links whatsoever to Redcare Telecom Ltd, coming forward and agreeing to buy the side of the business involved in maintenance contracts for phone systems.

“This facilitated a quick and efficient sale, protecting 13 jobs, with seamless continuance of trading.

“Pre-packs can come under criticism if business owners shake off liabilities to trade on in a new guise, leaving creditors out of pocket, but the sale of a revenue stream at Redcare Telecom is a positive example where a pre-pack is the ideal solution for all parties.

“Had there not been a pre-pack, there may not have been a buyer at all, leaving creditors nursing even larger losses, the creation of a number of new creditors (for example, employee redundancy claims and unfulfilled maintenance contracts) and reduced values for the assets, leaving a smaller pot for more creditors.”

Redcare Telecom, located at 1 Kings Court, Kings Road, Newbury, became insolvent after the equipment-selling side of the business was suddenly lost, closing a key route to market, explained Palfrey.

Had the firm’s maintenance contracts not been sold the level of creditor claims would have been expected to double as a result of claims under cancelled contracts and other costs associated with closing the company’s business, he said.

Approximately 70 creditors are owed an estimated £240,000.

Customers of Redcare Telecom, which dates back to 2002, included small-to-medium sized businesses from across all sectors, as well as schools, local authorities and GPs.

The firm provided, installed and maintained digital and internet protocol telephone systems, as well as discounted line rentals and call rates to customers.

It is the second time within two years that Smith & Williamson has led a successful sale in Newbury.

In July 2009 Gowrings Mobility, which sold wheelchair passenger vehicles, was acquired by an unrelated private company after a period of trading under the administrators’ control, with nearly 80 jobs saved.