Hunters’ Norfolk franchisee Kudos Residential, which ceased trading last month, went out of business owing more than £500,000, it has been revealed.
But it looks as though only £2,400 will be available to creditors, including the firm’s own staff and local suppliers.
A total of 21 employees of the business were left out of pocket to the tune of £17,000, while trade suppliers were owed nearly £63,600.
A statement of affairs from liquidators shows that a total of 21 employees were owed money.
Of the £17,000 owed to staff, just under £4,000 was arrears of wages and holiday pay, which will be treated preferentially.
The remaining £13,260, which is made up of redundancy pay and payment in lieu of notice, will not be treated preferentially.
The firm also owed £200,000 to HMRC and £220,000 in directors’ loans.
However, the firm’s liquidators Price Bailey estimate that only £2,400 worth of assets will be available for the creditors, from the sale of equipment.
That leaves an estimated total deficiency of £548,444.
Among the company’s individual creditors, a Norwich-based printing company, Eco Digital Print, was owed £31,771.
NatWest Bank is due £25,000 and Countrywide Signs in Norwich is £11,764 out of pocket.
Stuart Morton, an insolvency practitioner with accountancy firm Price Bailey, which is overseeing the liquidation of Kudos Residential, said: “We have already realised amounts far in excess of the figures shown in the statement of affairs and we have advised creditors that it may be possible to pay a small dividend to preferential unsecured creditors (claims for arrears of wages and unpaid holiday pay) in due course.
“Each employee, irrespective of whether a preferential dividend is paid in due course, has been invited to submit a claim for any redundancy pay, wages, holiday pay and pay in lieu of notice.
“The amounts they are owed will be paid by the Redundancy Payments Service, subject to statutory limits.
“We will continue to assist the former employees, at this difficult time, to ensure that their claims are processed as quickly as possible so that they can receive payment quickly.”
Kudos Residential’s demise resulted in the loss of 21 jobs last month, when eight of its nine branches closed.
The Hellesdon branch is currently being run by William H Brown staff to help landlords and tenants move their contracts over.
Yesterday, Hunters declined to comment.
This is really sad and a sign of the times
A DLA of £200k shows that at least the Directors were risking their own cash too
Hunters could perhaps have offered more guidance looking at previous articles on this issue
No doubt there will be many more mid size and corporate casualties over the next two years or so
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Directors risking their own cash? Brian Hutchinson owned Kudos Residential who were the holders of the Hunters Franchise in Norwich.
The directors loans (£220,000)) will be money drawn from the business, not money directors put in and then £200,000 owed to HMRC shows they had not been paying their VAT or PAYE for months.
One of the debts to Eco Colour Print is £31,000 is also owned by Brian Hutchinson and has a registered address identical to Kudos residential.
They even failed to pay their 21 staff and they are the ones I feel sorry for.
Hunters won’t comment as they will understand the true situation……..
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Interesting comments; thanks for the perspective.
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eer??
if the company owes the director as it says, then…. guess what.. the director put his money in and did risk and lose it.
Guess you haven’t been a director ?
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If the company owes a directors loan as a debt it means the directors put money into the company and it’s been spent to set up the company, expand it or keep it running. Owing £4,000 to a total 21 staff isn’t great but it’s far from sounding like the directors ran the company to the ground if it wasn’t able to pay an invoice one of the directors other companies. HMRC is always the biggest loser in these sad cases.
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FYI….. directors loans are money put into the business by the directors. Hence why they are called loans, they would usually be paid back to them when the business performance is adequate. Again, hence why they are classed as debts. They have clearly put in a lot of cash and the business has failed. Having owned a property company, cash flow is so sporadic and the buoyancy of the market is not clear, it would have happened very quickly as the costs of running such a business are so high (you can’t not pay rightmove etc!)
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Get your facts right J1, this is not a a mid size or corporate but a small local business that happens to have taken a franchise.
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21 staff is mid sized in my book, but thanks for the clarification
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You must be very small then.
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PepeM
What does it matter and why the implied snide comment?
21 staff is mid size – heck to me it large. I only employ 6 staff. But at least we are profitable and stable and not going bust.
Perhaps you have been told a few time that size doesnt matter……. 😉
As others have said the £220k directors loan is money out of the business into the directors pocket.
Be interesting to see how their client fund is and if holding the correct money. It may be that the new firm taking on the letting portfolio has “bought” it at the cost of ensuring all deposits are covered.?
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“As others have said the £220k directors loan is money out of the business into the directors pocket”
This does not appear to be the case. It stated the firm owed £200k to Directors, so this is money put in by the Directors.
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What happened to the lettings book? That would have had a value that could have been realised if they’d dealt with it properly. Or does it just go back to Hunters as the franchisor? Maybe Eye knows…
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The lettings book has gone to William H Brown (Sequence) as Ros reports above…
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Correct and this is why the receivers have stated that already a sum well in excess of the declared assets of £2,400 is now available for distribution.
There was a time that that level of debt to HMRC resulted in a stint in the tower of London! It will be a matter for the receivers and Her Majesty’s finest to work out what those Directors Loans were….sometimes they are used to enhance peoples lifestyle’s and cleverly dressed up, other times it is genuinely for business purposes. 1 similar car crash that I heard of that happened 18 months ago, the MD was seen to disappear to Portugal with suitcases loaded with da loot!
Hunters will need to answer their share holders as to whether their due diligence highlighted these risks because that level of debt doesn’t happen over night. I feel sorry for the staff who as always will be high and dry. The word of caution on this is how listed companies report to the stock market. It goes to show that the official line will be massaged for a positive spin….until it catches up with them. from their trading update in February:-
‘We are already seeing an improved level of enquiries from high quality independent businesses. Our financial strength will enable us to both expand our network and reward shareholders with an attractive dividend.
Glynis Frew, Chief Executive, said:
“We are pleased with our performance and the progress we are making in adding high quality businesses to our network. Our organic growth is significantly stronger than our competitors and we are optimistic that this will lay the foundations for further growth.
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Didnt they join Hunters some years ago? Easy to build up a £200k debt to HMRC in only a few months let alone years!
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Nearly every time a business fails it turns out that HMRC is owed a shedload of money. Quite how this comes about is beyond me. On the extremely rare occasions when we have made a late payment of PAYE or VAT they are all over us with letters, fines, and threats of dire consequences.
So how is it that these companies get away with running up such very large debts of PAYE and VAT? Is it because in the overall scheme of things a few hundred grand of tax is nothing and the authorities would rather use their resources to go after bigger fish?
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Very interesting to see no mention of the £400,000 hunters ploughed into the business when Kudos became part of their franchise network in 2015. I wonder where this money has gone?
£50k payout per branch in 2015. To £500k debt in 2018? Estate agency and lettings is very competitive in Norwich, but hunters always seemed to have stock on their books. I wonder whether the most used appliance in those offices were the telephone or the kettle?
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I would have thought Hunters received their money back on marketing and percentage of revenue in that 3 years and some.
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I feel sorry for the staff, I worked for a couple of small local agents, and I always had my heart in my mouth slightly when checking my bank balance on pay-day, just in case!
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