Erinaceous appointed an administrator today to the bulk of its business after failing to find a way of paying back its debt.
But administrator KPMG will oversee a sale of the property insurance business into a special purpose vehicle owned by Erinaceous’ lenders, to whom they owe more than £225m.
Dashed hopes
‘The board has continued working with the company's lenders with the objective of maximising the group's value and keeping it as a going concern,’ Erinaceous said. ‘Until very recently, the board was hopeful that it would be successful in this aim.
‘However, given the extent of the challenges facing the group and the current state of the capital markets it has not been possible for the group to reach an agreement with its lenders and other creditors and therefore the board has now concluded, with regret, that it is necessary for the Company to file for administration.’
The move means uncertainty for more than 120 staff still left in the commercial property division.
Rapid expansion
However, the residential management and property maintenance businesses would continue to be run as a going concern.
The company commenced a strategic review in September after revealing that it had breached its banking covenants. From the time it listed on AIM in 2003, it had undertaken a rapid process of expansion by snapping up small firms and bolting them on to the group in a bid to become a ‘one-stop shop’ for property services.
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