report on progress
How the furniture business, owned by Manchester-founded
company Inc & Co, ran into difficulties
How the furniture business, owned by Manchester-founded
company Inc & Co, ran into difficulties
The director of the company that ran luxury furniture retailer Maker&Son has given only “extremely limited” co-operation in providing information about its assets, a comprehensive list of unsecured creditors and other records, liquidators say. However, the company’s legal team says there is no evidence to support the claim.
The online retailer sells beds, chairs and tables, as well as sofas that can cost more than £10,000.
It was set up in 2018 by Alex Willcock and his son Felix Conran but ran into financial difficulties before being acquired by Manchester-founded Inc & Co in August 2022.
At the time, Jack Mason (pictured), group chief executive officer of Inc & Co, told the Retail Bulletin: “Inc & Co much like Maker & Son is honed on creating and delivering products and services for the modern, sustainably-conscious and digitally aware customer. Maker & Son fits seamlessly into the Inc & Co portfolio of brands and we can’t wait to get under the skin of the business.”
However, customers were frustrated by delays in delivering products for which they had paid deposits and by limited communication from the retailer. Maker&Son says all rescue efforts were slowed down “due to a series of legal complications”.
On 3 October, Benjamin Neil Jones and Arvindar Jit Singh of the business advisory firm FRP were appointed joint administrators after Barclays filed an application. FRP says the bank is owed approximately £4.9 million as a result of three term loan facilities it acquired from capital growth firm Magenta Partners, which invested in the business in 2021.
The administration followed a period of change for Inc & Co and the retailer it acquired.
According to Companies House records, on 12 August a company called Maker&Son Ops Ltd appointed Jack Mason as a new director. Mason is group chief executive of Inc & Co. On 31 August, Mason also became a director of another company, MSOLD1 Ltd. On 3 Oct, MSOLD1 Ltd changed its registered address from Haywards Heath to 125 Deansgate, Manchester. On 4 Oct, Maker&Son Ltd changed its name to MSOLD1 Ltd. This is the company that was put into administration and subsequently liquidation.
In a progress report dated 2 December, Jones and Singh say Mason contacted them when they were appointed and told them MSOLD1 Ltd “had sold all of its business and assets to Ops [Maker&Son Ops Ltd] on 22 September”. Their report adds: “Ops is an entity ultimately owned and controlled by Inc.”
Mason also told them the purported business and asset sale included a Transfer of Undertakings (Protection of Employment) transfer of the company’s employees.
Maker&Son Ops Ltd continues to trade the business. When the administrators went to Maker&Son’s trading premises to identify and secure company assets and records they “were excluded from the sites by Ops”, says the FRP report.
Concerned by the nature and timing of the purported transaction, the administrators filed an application in court to end the administration and instead be appointed joint liquidators, to wind the company up. In granting the application on 18 November, the court also voided the asset purchase agreement whereby the business and assets were sold to Maker&Son Ops Ltd.
“Further information and/or documentation that the administrators consider satisfactory has not been provided by the Director [Mason] or those stated to be his legal advisors”, says the report.
It also notes that following its appointment, “a yet unidentified party utilising the Company’s account details at Companies House erroneously and without authorisation recorded as satisfied the debenture assigned to Barclays”.
As well as the sum owed to Barclays, the administrators say HMRC has made a claim estimating it is owed £1,445,355 as a secondary preferential creditor – which can apply to VAT, PAYE and employee National Insurance contributions.
They say they will continue to try to identify all unsecured claims, including consumer creditors.
Further detail of Maker&Son debts can be found in the court’s judgement in the 18 Nov case. Judge Worster says a document Mason provided to the court gives the total creditors figure as £21,832,938. Those creditors include Maker and Son PTY Ltd – the Australian subsidiary – Maker & Son Ops Ltd, which is owed £2,785,073.86 and Maker&Son Holdings, which is owed the same sum.
The judgement says Maker&Son Holdings is solely owned by Investment Holdings BVI Ltd, which is the majority shareholder in Inc & Co. Mason was appointed director of Maker&Son Holdings Ltd on 3 August.
Judge Worster writes that of note is the fact that the “Ops and Holdings debts are the same to a penny”.
The judgement also notes that on 31 August, MSOLD1 Ltd assigned its trade marks to Maker&Son Holdings Ltd in a transaction registered at the IP Office on 16 Sept.
In a statement on its website, Maker&Son said “all customer deposits and any payments made to Maker&Son Ltd (MSOLD1), prior to 3rd October 2022, have now been liquidated”.
The statement added: “While we continue trading as Maker&Son Ops Ltd, at our own cost we will be working with customers to fulfil all historic orders and as many refunds as possible from the liquidated company. Unavoidably, there will be significant delays to these orders and some restrictions.
“There may be some small delays to new orders in the UK due to the backlog and recent changes, however these remain minimal and we will continue to keep all new customers updated regularly.”
In a response to a negative Trustpilot review, on 16 December Maker&Son said: “Since the brand changed hands in August, the company has had very complex challenges to overcome with the situation changing from week to week. This has made it difficult to communicate and provide clarity to our customers, who, as we now understand, were already at the receiving end of a poor experience.
“While it is taking a substantial amount of time to rectify, we are open for business and committed to fulfilling all customer orders, no matter the cost and necessary length of time it takes to deliver on this promise.”
But on 14 December an application was filed in court by Global Investments Management Holdings Inc to appoint administrators for Maker&Son Ops Ltd.
Inc & Co told TheBusinessDesk.com on 22 December: “Global Investments Management Holdings Inc is an entirely separate entity and there is no connected party.
“Global Investments Management Holdings Inc is protecting its position because of issues beyond our control. Global is willing to continue supporting the company and brand going forwards.”
Inc & Co also told TheBusinessDesk.com that “customer orders will still be fulfilled if there is an insolvency event”.
On its website Inc & Co describes itself as a “Manchester-founded business group with brands across retail, property, digital, food & beverage and logistics”.
According to his website, another of its founders is Scott Dylan, who “oversees the strategic direction of the company, which I created with my business partners to bring companies together to help businesses improve their business operations and collaborate. Inc & Co invests in and funds the acquisitions of companies.”
He describes Inc & Co as a “private equity disruptor”.
In March 2020 Big Issue North reported that staff at Inc & Co companies Dreamr, Cuhu and Neon had not received some employer contribution payments to their pensions.
Last week Big Issue North put a series of questions to Mason. We asked why the administrators were concerned about the nature and timing of the 20 Sept sale of MSOLD1 Ltd’s business and assets, whether he had identified who had erroneously recorded the satisfaction of the debenture to Barclays at Companies House, and whether he would provide the administrators with a comprehensive list of unsecured creditors. We also asked for his response to what the administrators called his “extremely limited” co-operation.
Mason did not reply to the specific questions but told Big Issue North: “We took over the company in August 2022 at a time where the previous owners had racked up over £16 million worth of debts – none of this debt was built up by us.
We’ve been picking up the pieces ever since, in order to keep as many staff in jobs, and as many refunds and customers orders honoured – something that would have fallen away with any liquidation. We continue to do just that.”
Later, Inc &Co’s legal team emailed Big Issue North. It said the nature and timing of the 20 September sale was forced on its owner by the withdrawal of its loan facilities.
“As part of the restructure, this meant splitting the business out into its own entities – one for licences, one for UK trade, one for global trade and so on. The agreement for this had been signed on 20 September but as it was after the winding up petition issue date – not service date – it meant that the transaction was void. £500,000 was lost by Inc as part of this transaction being voided.”
The legal team said there was “no evidence” of an erroneous filing at Companies House and insisted “any updates made to Companies House by any party of the company was [sic] made before any appointment of administrators”.
The legal team said it was “incorrect” that Mason had not provided a comprehensive list of unsecured creditors. “The director has fully co-operated and given a complete list of unsecured creditors.”
Mason said: “I was a director for 30 days and have provided all the requested documentation and have been fully co-operative.”
He added: “The brand is fully protected and will be rolled out globally in Q1 2023.”