This week, it has been reported that 91 staff members have been made redundant at claimant firm, Simpson Millar.[i]
Simpson Millar was acquired by Fairpoint Group in June of 2014, the first of multiple Law firm acquisitions. However, the share price of the ABS ‘plummeted’ to 10p from 192p in 2016, on the basis of ‘downgraded’ profit projections in a ‘turbulent’ 2017. Subsequently, in June of last year, Fairpoint was forced to suspend trading and entered into administration.
In edition 197 of BC Disease News (here), we reported that Doorway Capital Limited would provide a ‘Receivables Funding Facility’ of ‘up to £5 million’ in working capital to Simpson Millar (and its subsidiaries) to ‘take advantage of the growth opportunity presented by the size and highly fragmented nature of the consumer legal services market-place’.
In an announcement to the London Stock Exchange, Fairpoint assured that:
‘The appointment of administrators to Fairpoint Group Plc will have no impact on the day to day running of these businesses’.
In August of last year, Simpson Millar predicted that:
‘Whilst we are saddened that this has been a difficult time for Fairpoint Group, it is business as usual at Simpson Millar and we do not anticipate any significant changes as a result of Fairpoint Group’s announcement’.
Nevertheless, Simpson Millar will commence with redundancies across the firm’s 9 offices in England and Wales, including 20 fee earners and 71 members of back-office staff.
Cuts have been attributed to ‘significant under-investment’ by Fairpoint and the firm has called for stability, as 8 employees are redeployed to new roles and 6 further positions are considered.
Yesterday, it was reported that Doorway Capital have ‘written off almost £30 million in acquired debts’, while provisional accounts for the year ending 31 December 2017 show ‘recorded losses of £7.6m’.[ii]
As a consequence, auditors for the accounts have noted that further funds will be necessary in order to continue financing the firm. Julien Rye, of accounting firm, BDO, has confirmed that the conditions of Simpson Millar ‘may cast significant doubt about the limited liability partnership’s ability to continue as a going concern’.
[i] John Hyde, ‘Simpson Millar 'very sorry' as 91 jobs axed’ (26 February 2018 Law Gazette) <https://www.lawgazette.co.uk/practice/simpson-millar-very-sorry-as-91-jobs-axed-/5064992.article> accessed 26 February 2018.
[ii] John Hyde, ‘Accounts reveal £7.6m annual loss at rescued Simpson Millar’ (1 March 2018 Law Gazette) <https://www.lawgazette.co.uk/practice/accounts-reveal-76m-annual-loss-at-rescued-simpson-millar/5065041.article> accessed 1 March 2018.