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CRS buyers were unaware of of bad debts or public inquiry
Page 12
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When CRS 24:7 was sold, its new owners thought they were starting with a clean sheet. How wrong they were... Chris Tindall reports.
THE TWO MEN behind the purchase of haulage contractor CRS 24:7 were unaware of inaccuracies in its costing system, had debts or even an upcoming public inquiry, according to administrators, Barry Stanley and Andrew Croll, directors of Lancashirebased operator Fastserv, did not carry out a full due diligence exercise into CRS 24:7 when they first discussed the purchase with original director Gary Keenan. They were forced to call in administrators less than three months later, due to falling turnover. mounting debts and -extreme pressure" from creditors.
Keenan met Stanley and Croll in May to discuss them taking a financial interest in the firm. According to the administrator's report they "conducted a cursory examination of the available informationand believed Keenan when he told them he had given various staff their notice to make savings.
However, problems started just days after their purchase. There were missing Pons, an unofficial overdraft of £100,000 was withdrawn and a finance company removed more than .£72,000 in funding following an audit.
The report adds: "There was also a significant decrease in turnover of approximately £150,000 per month since April and it appears that work may have been diverted from the business during this period. The matter has been reported to the appropriate authorities by the new directors."
It transpired that Keenan had started negotiations with another company, but it withdrew at the last moment because "the business was not as portrayed in the financial information-. The new directors had asked for assurances that CRS 24:7 had no legal issues pending and were told it had been given a clean bill of health in January 2006, It has since been discovered that the company was due to face a public inquiry for offences committed during 2004/5.
Keenan, who stayed on as a director, resigned at the end of July. A director's loan in the name of Mr G Keenan currently stands at £61,918.
Administrators at Begbies Traynor say it is hard to say what the outcome on debt collection will be. Total debts are calculated to be #2870,696; to date £98,674 has been received and banked.
There are believed to be about 40 contractors.
Croll and Stanley were unavailable for comment as CM went to press.