Franchised car retailers across the UK have been left exposed to considerable financial losses after Nationwide Accident Repair Services entered administration, along with a number of its subsidiaries.
PricewaterhouseCoopers (PwC) were appointed as administrators of the Oxfordshire-based business, which operates a national network of garages, servicing the accident repair market for large UK insurance firms.
A deal was subsequently completed which saw the majority of Nationwide Accident Repair’s business and assets sold to RunMyCar Ltd, a subsidiary of Redde Northgate – saving almost 2,350 jobs across 80 sites.
One parts manager at a major UK retail group, whose business is owed a five-figure sum by Nationwide, told AM that a rise in third-party business failures in Q4 could place a huge toll on businesses battling to run lean and regain profitability in the wake of the COVID-19 lockdown.
“Doubt over whether we will get that money is the last thing we need right now,” said AM’s source.
“The recovery has looked really good so far, business has been really strong, but (business failures) could prove to be a huge issue for the whole sector. Lots of car dealers are likely to find themselves exposed to this kind of thing in the months to come.”
A total of 540 roles are understood to have been made redundant as 30 sites Nationwide Accident Repair Services were closed as a result of its shift into administration.
Rob Lewis, joint administrator at PwC, said: “As with many other businesses, the group had to weather major financial fallout due to the economic impact of COVID-19, which meant that trading volumes were significantly reduced.
“Against that backdrop, the sale announced today reflects a significant positive outcome for the business, and we are especially pleased to have safeguarded 2,350 roles including apprentices, mechanics and technicians.”
Redde Northgate’s acquisition, through a subsidiary, of certain businesses and certain assets of Nationwide Accident Repair Services will see around £17m of gross assets – including a fleet of mobile repair vans to service customers transfer to the purchasing subsidiary.
The assets were purchased for an initial cash consideration of up to £11m, as well as a deferred amount of up to £5m dependent on the retention of certain trade business on satisfactory terms.
Redde Northgate chief executive, Martin Ward, said: “This acquisition, our first post-merger, is in line with that vision and significantly increases our strategic and operational capability to support a wider number of business partners requiring automotive repairs.
“We expect this acquisition will open up new markets to the group, and in combination with an established pipeline of repair work from existing group companies, such as FMG, it is well placed to maximise future opportunities”.
Redde Northgate was formed of the merger of Redde and Northgate in February of this year, which global law firm Bryan Cave Leighton Paisner’s (BCLP) Public M&A team, led by Benjamin Lee, advised on.
The BCLP team was led by restructuring and insolvency partner Ian Benjamin, supported by senior associate Daniel Bell (corporate), associate Phil De Vries (restructuring and insolvency) and associate Richard Brearley (real estate).