Support withdrawn

Glass Times editor Nathan Bushell considers the effects a supplier withdrawing support can have.

The rumours regarding the Customade Group had been circulating for a number of weeks, so it came as no surprise when, last Friday night, a statement appeared on its website saying that it had been bought out of administration by private equity group Nimbus.

I duly tweeted the news, but less than 12 hours later I was told that the statement had been removed because a deal had yet to be finalised.

Yesterday, a press release did re-emerge, along with news that Polyframe Halifax and Polyframe Livingston wouldn’t be reopening.

The online storm that raged between the two events was significant enough to lead some to suspect that Nimbus had reconsidered its position.

Among the tweets was one from Veka saying that it would no longer support the group – Veka products were manufactured at Halifax and Livingston.

This is very big news, as far as I am concerned.

One the one hand, saving a company from collapse secures jobs. That is worth celebrating, and in this case the new management at Customade/Nimbus said that 870 jobs were saved across multiple sites.

However, when bills go unpaid, suppliers also face difficulty, and Veka has very publicly stated that it had initiated a consultation process that would likely result in job losses because of problems faced by customers; when Sash UK ceased trading on June 11, 199 employees were made redundant, but it also left a big hole in Veka’s accounts.

There are many other suppliers that will be in similar situations, and we could easily see others making redundancies.

When companies enter administration one day, and emerge with a clean slate the next, many cry foul play. However, it is a futile gesture because it is a legally sound accountancy mechanism, and one benefit is that it arguably achieves the best outcome for creditors.

Obviously, ‘insolvency’ can take many shapes, and each case is different, and I am certainly not making any judgement on any company here.

However, it is worth noting that many companies who do cry foul often end up supplying the new company further down the line. So, for Veka to publicly announce its intention to withdraw support, I believe, is a significant development.