No, Axminster Carpets did not go bust in the sense of ceasing operations entirely. While the company did face significant financial challenges and entered administration, its future was ultimately secured.
Understanding the Financial Situation
Axminster Carpets, a company with a long history spanning over 265 years, entered administration due to financial difficulties. Administration is a formal insolvency procedure managed by appointed administrators (such as those from Duff & Phelps in this case) designed to rescue a company, sell its business as a going concern, or achieve a better outcome for creditors than liquidation.
Key outcomes of this process included:
- Entry into Administration: The company formally entered administration, indicating severe financial distress.
- Job Redundancies: This period led to the unfortunate loss of 80 jobs.
- Sale as a Going Concern: Crucially, the business was not liquidated but was successfully sold as a going concern. This means the company's operations continued under new ownership, which included a group of UK private investors and the Dutfield family.
- Future Secured: The sale ensured that the heritage and business of Axminster Carpets were preserved, preventing its complete collapse.
Administration vs. "Going Bust"
The term "going bust" typically refers to a company reaching full liquidation, where all assets are sold off, the business ceases to operate, and the company is dissolved. Administration, while a serious step, is often a strategic measure aimed at preserving the company's core business or assets.
The table below highlights the key differences:
| Feature | Company Administration (Axminster Carpets) | Going Bust (Liquidation) |
|---|---|---|
| Primary Goal | Rescue the business or sell it as a going concern | Wind down operations and sell all assets |
| Business Status | Continues to operate, often under new ownership | Ceases all operations, dissolved |
| Job Impact | Potential for job losses, but some jobs may be saved | All jobs are typically lost |
| Asset Outcome | Assets may be retained and used by the continuing entity | All assets are sold to pay creditors |
| Future | Potential for brand and operations to continue | Company ceases to exist |
In summary, Axminster Carpets navigated a difficult financial period by entering administration, but it ultimately avoided outright collapse by being sold as a going concern, thus securing its long-term future.
