TBA Textiles sold to The Fothergill Group after entering administration

TBA Textile/TBA Protective Technologies

Rochdale’s oldest yarn manufacturer, TBA Textiles has been sold to The Fothergill Group after entering administration.

TBA Textiles entered administration on 30 May after experiencing cash flow difficulties.

In April, the former General Manager and Managing Director, Mark Lineker, says he raised concerns with the invoice discount financer, Close Brothers, when they declared two breaches of contracts.

Invoice discounting is the practice of using a company's unpaid accounts receivable as collateral for a loan, which is issued by a finance company.

Mr Lineker said: “I immediately rang them and said this was going to kill the business. The invoice financer provided 85% of the money immediately, plus a percentage for the fees and year. You become reliant on it for paying wages, etc. I was encouraged because they said they’d help and support us, and they reckoned the turnaround would be around two weeks.

“We were in administration between 26 April and 26 May, during which time we had no payment. Our only cash was from shareholders, our personal money, 15% from the invoice discounters, and non-notified debt [from another business].

Administrators at FRP Advisory were drafted in as the business was declared ‘insolvent’ and 13 members of staff were made redundant with no period of notice.

Mr Lineker continued: “I had a gun to my head. We were told no wages would be paid unless we made as many people as redundant as we could. Pay day was supposed to be 26 May, a Friday.

“Normally, administrators tell staff. As Friday is an early finish, they made me do it. I had to ring around everyone to try and get hold of them to tell them. I had no choice, but despite doing it, my wage was withheld.

“ We went into administration. We raced to our solicitors and lodged an appeal to go to court the same day.”

He added: “I paid £42,000 out of my own savings to pay their wages.”

Former owner Craig Smith, who bought the company with his son in 1998, said: “The administrator tried to impose new terms and conditions on our customers, which they wouldn’t agree to.

“One agreed to cash on delivery and still hasn’t been paid. Inventory has been sat on the docks waiting for manufacturing because the administrators said they can’t start production until it was agreed to pay up front.

“One of our largest creditors and customers was still happy to continue trading, but they might not be now.”

Both men had a combined investment in the company of 64% but were classed as ‘unsecure creditors’.

Mr Smith explained: “We entered a secure loan agreement in good faith. The administrators and invoice discounters can pass their terms of agreement and say we aren’t secure anymore.

“If sold within 120 days, machinery, equipment and stock recovery was estimated at £303,000. After the administration and invoice discounter fees, plus total recovery, there was no money left for the unsecure creditors.”

Mr Smith continued: “We negotiated to buy the business back as we were keen to secure the jobs and the future of the business. At 4.38 in the afternoon, we signed everything, FRP signed, on Wednesday and we agreed to pay off the invoice discount financer with a new invoice financer to buy them out.

“We announced to our employees the same night we thought we’d got it. Three hours later, our major competitors were shown in for photos of proprietary processing equipment.”

Mr Linker continued: “We went in on Thursday to speak to our staff. We were escorted off the premises and have been barred from the site. They didn’t want us to talk to our employees. They didn’t tell us they’d sold the company to Fothergills.

“We thought we had the deal, we fought hard to secure it and their jobs. We hope it works out for everyone but it’s been very upsetting and distressing.”

Mr Smith explained: “The sad thing is, the people who pay the price are the employees.

“They said it was their job to look after us but they couldn’t tell me what percentage of unsecure credit was secured in the sale process. We never received a penny.”

They added: “This process has done immense damage to the business. We hope the company survives for the benefit of the people.”

Mr Lineker added: “I haven’t met any employees who have worked as hard. I regret we didn’t do a better job of buying the assets and protecting their jobs.

“I feel really bad because we announced we had kept their jobs and we later found out that was not the case. It was a pretty dramatic experience. The saddest part is, I won’t get to work with those employees again. If we had an opportunity in the future, we would hire them again.”

Mr Smith commented: “I’ve been involved in manufacturing products like TBA since 1980. We won’t be out of business. It might not be here, there’s a big market in the US. I’ve offered Mark a job with another of my companies.

“It’s a shame the employees don’t have the opportunity to participate. I think the new owners have a tremendous opportunity.”

FRP Advisory say they continued to trade the business as a going concern, retaining its 57 staff while marketing the business and assets and evaluating a number of competing approaches before securing the sale to Fothergill. 

Ben Woolrych, joint administrator and partner at FRP Advisory, said: “We are pleased to have secured the future of TBA Textiles which is a great result for its staff and the wider Rochdale manufacturing community. Fothergill’s long history in the manufacture of high quality, high performance technical textiles makes a good fit for TBA Textiles and we wish the new owners all the best for the future.”

Solicitors at Addleshaw Goddard’s Manchester office advised the administrators at FRP Advisory, while solicitors at Gateley plc in Manchester advised the purchasers at Fothergill.

One of Rochdale’s oldest manufacturers, the long-established company was formed in 1871 and manufactures high quality thermal and heat protection textiles from its base in at the Transpennine Trading Estate on Gorrells Way, Rochdale.

TBA Textiles has over 140 years’ of experience as a global developer and manufacturer of an extensive range of high performance passive fire protection textiles and products, such as fire curtains, barriers and hoods used mainly in the construction, marine and transportation industries.

In August 2015, TBA launched graphene alternatives to ITO coatings for anti-static, EMI shielding and explosive atmosphere applications. The graphene products were developed to replace conventional highly volatile and heavy metal filled formulations for the speciality electrically conductive coatings market, allowing application on curved or flexible surfaces.