Nationwide Accident Repair Services Administration
As many Dealers and OEM’s will be aware, on 4 September 2020 it was announced that Rachael Wilkinson and Rob Lewis of PricewaterhouseCoopers (PwC) have been appointed as joint administrators of Nationwide Accident Repair Services (“Nationwide”) and a number of its subsidiaries.
The joint administrators have completed a pre-pack sale of the majority of the group’s business and assets to RunMyCar Limited, a subsidiary of Redde Northgate plc. This has safeguarded almost 2,350 jobs, although 540 people have been made redundant and 30 sites closed.
The pre-pack process is simply where a sale of the business and or assets is agreed prior to Administration. The Administrators then sign the sale and purchase agreement (“SPA”) and complete the sale immediately upon on their appointment so that there is a seamless transition of the business to the purchaser.
Impact on Motor Dealers
We have been in communication with many of our dealer and OEM clients and networks since Friday and understand that a number of dealers have sold parts to Nationwide and are owed money for the supply of these parts.
We are also aware that many have included standard Reservation of Title (“ROT”) clauses in the supply contracts however the nature of the parts sales to body shop businesses is such that the ability to enforce these clauses and make financial recoveries is expected to be difficult.
This briefing paper has therefore been prepared by Mick Sanders (Partner who heads up MHA’s Restructuring and Recovery team) with support from Ruth Thurland (from the Motor specialist Business Recovery and Insolvency team at Geldards) and outlines the impact of the Nationwide pre-pack on dealers and the potential options and actions that may be taken to seek to potentially recover any financial exposures.
Communicating with the Administrators
Dealers and OEMs may have ROT claims where they have supplied parts to Nationwide which have not been paid for. We would expect that, prior to the sale being agreed, the proposed Administrators will have organised a stock take and valuation of these assets by a valuer with the appropriate experience and qualification. Depending on the wording of the ROT provision this may (if it has been properly incorporated into the contractual agreement between the parties) enable suppliers to identify and reclaim any stock held by Nationwide that is subject to ROT.
Additionally, and also depending on the wording of the SPA, ROT claims may fall to be dealt with by the Administrators, or by the purchaser. In the first instance the supplier or their representative should approach PwC notifying of their claim and seeking confirmation as to how they inspect/recover any goods/funds that are due.
There are many practical issues that can arise when seeking to enforce a ROT claim – it may not be possible to identify the goods, they may have been on-sold, or they may have already been fitted to vehicles. ROT creditors will also have a non-preferential, unsecured claim in the Administration for any unpaid sums. They should submit details of their claim to PwC with stock/funds recovered under ROT accounted for. We can assist with formulating details of the claim and completion of the relevant paperwork if necessary.
The purchaser does not take on responsibility for the debts of Nationwide and will not be liable for creditor’s claims unless it has received assets which are subject to valid ROT. However, it may be possible to renegotiate future trading terms with the purchaser, particularly if they require the suppliers’ assistance in their future trading.
Notifications from the Administrators
Creditors should receive formal notice of the Administration from PwC shortly, with a full report/proposal to follow within 8 weeks which will show whether there is likely to be a dividend to unsecured creditors, and if so how much.
Support with actions to be taken/next steps
We are able to support any dealers in relation to the immediate actions to be taken as follows:
- Formulating details of your claims
- Completion of the relevant paperwork
In addition, if any dealers would like to discuss risk management procedures which could be put in place to reduce the exposure to other counterparties and their credit risks then please do contact our Head of Motor, Steve Freeman directly on 07795 476 651 or by email at firstname.lastname@example.org
There have been some very good examples we have received of suppliers who had initiated such procedures in the case of Nationwide and have significantly limited or eliminated their financial exposure and risk.