Partner Article

Keighley manufacturer goes into administration due to accounting errors

Keighley-based manufacturer BCI, which was backed by an investment firm, has been forced into administration after accounting errors were discovered following the departure of an employee responsible for its books.

Administrators have managed to set up a rescue deal which saved jobs at BCI Process, formerly known as Brewchem International which makes process pipe work systems and other steelwork structures used in the food, beverage and water industries, working on contracts worth up to around £1 million.

It has worked with many major utility companies, brewing and beverage, food producers and pharmaceutical companies, employing approximately 20 full-time staff and about 50 contractors.

In 2012, the company had secured investment from Hughes Armstrong Corporate Investment to help pay a debt to HM Revenue and Customs (HMRC), entering into a time to pay agreement with the government agency.

However, in February 2014 the business received a demand for £300k from HMRC which did not tally with its own accounts. The company’s internal accountant said this was overstated but when the employee subsequently left in March, major accounting problems were said to have been unearthed.

After a review by Meadows Chartered Accountants, it was found that BCI had made a loss of £233,000 for the nine months to 30 June 2013, not the pre-tax profit of £155,000 it had previously thought, and a further £233,000 loss for the nine months to 31 March 2014.

It was also discovered that a sum of £1.1 millioncould be payable to HMRC meaning the business was technically insolvent.

Restructuring firm Leonard Curtis was contacted for advice and attempted to agree a payment schedule with HMRC, but BCI was unable to comply with the plan suggested.

A winding-up petition and a tightening of credit from the company’s invoice finance provider subsequently led to the appointment of administrators from Leonard Curtis before a pre-pack rescue deal was agreed with BCI Brewchem (Anglia), a business owned by Hughes Armstrong.

This was posted in Bdaily's Members' News section by Clare Burnett .