A Lancashire-based manufacturer of sports surfaces that worked with teams such as Wigan Warriors and Warrington Wolves ceased trading after two of its pitches failed durability tests and were deemed to be unsafe, new documents have revealed.
The Thornton Sports Group entered administration and ceased trading on 4 May 2014, with Joanne Hammond and John Russell of Begbies Traynor appointed joint administrators and 47 of the 52 staff made redundant. The group consisted of Thornton Sports, Thornton Contracts, Nordon, GTC Sports and Protech Allweather, along with one associated company Soccerturf (UK).
According to a newly published statement of administrator's proposals, the group experienced cash-flow issues as a result of problems on two major projects.
It said: "The companies' financial difficulties started when they began to experience product default issues in respect of two large contracts completed under the framework agreement. Following testing by the framework agreement's administrators, both pitches failed product durability tests and were deemed to be unsafe for the specific sorts they were intended to be used for.
"Despite a lengthy period of investigation into Nordon's manufacturing procedures, the raw materials used in the process and the installation procedure undertaken by Contracts, the companies could not determine the cause of the product default issue.
"The remedial costs associated with removing and reinstalling the two faulty pitches were estimated to total between £300,000 and £400,000. The companies did not have sufficient working capital to cover these costs and, even if the costs could be met, without being able to determine the cause of the product failure there was no guarantee that a newly manufactured pitch would pass the relevant tests."
In addition, it was discovered that Thornton Sports had mistakenly received a double payment for one of the faulty pitches, which it would not have been able to repay.
As a result, Begbies Traynor was brought in to advise the group's directors.
The business recovery practice determined that Thornton Contracts could no longer continue to trade without a cash-flow injection. And it was concluded that Thornton Contracts could not continue to manufacture and sell its services without resolving the product issues, and Thornton Sports was rendered insolvent by virtue of the overpayment claim.
The group was so intertwined, moreover, that the failure of Thornton Contracts, Thornton Sports and Nordon had a knock-on effect on both GTC Sports and Protech Allweather, while Soccerturf (UK) became insolvent as a result of the failure of the group companies and intercompany debts.
The report also gives an indication of the scale of creditor claims.
It shows that preferential claims, comprising employee wage arrears, salaries and holiday pay, are estimated at £1,647. Administrators expect that there will be sufficient funds to enable a distribution among these creditors.
However, unsecured creditor claims are estimated at £3.6m. But the report warns that the size of any dividend to unsecured creditors is dependent on the level of realisations achieved in respect of the company's contract debts.
Thornton Sports Group has made artificial grass pitches for the likes of Wigan Warriors, Warrington Wolves, Alderley Edge Cricket Club, Lancaster Tennis Club and Prairie Sports Village in Burnley.
Ultimate parent company Thornton Sports, which is based at Altham Industrial Estate near Accrington, held a framework agreement to supply and fit sports pitches for projects funded by official sporting bodies.
Meanwhile, Thornton Contracts was responsible for overseeing the installation and fitting of pitches on behalf of Thornton Sports, and Nordon operated a factory at Altham Industrial Estate that produced the surfaces.
GTC was set up to supply and install complementary sporting products and Protech, based at Wigston in Leicestershire, was responsible for the ongoing maintenance of artificial pitches installed by the companies. Soccerturf was set up to make a special type of artificial turf using the facilities owned by Nordon.
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