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Friday, 17 June 2011

The Licence Factory in Administration

The Licence Factory has gone into administration following an appointment by its lenders GE Commercial Finance. The company specialised in home and fashion accessories such as bags, umbrellas and luggage and is a subsidiary of Stockport-based Marlwood.

In a statement Marlwood said: “Marlwood will continue to explore the options available to it with respect to the ongoing business, however, it is clear that this appointment will present severe challenges to the group.

“We intend to issue a trading update shortly to provide shareholders with further information about the financial position of the group.”

So what happened here? 
As a secured lender, GE Commercial Finance have the right to appoint an administrator in order to recover their debt.  See our pages on fixed and floating charges and creditors rights.  Their debt is paid ahead of the trade creditors and HMRC who are unsecured in an insolvency situation.  This may seem harsh on the others but finance would be much more expensive for businesses if the lender had no security.

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