New owners at the helm of national firm Simpson Millar have written off almost £30m in acquired debts, it emerged this week.
The LLP, which is in the process of cutting 91 jobs, was rescued last year by investment business Doorway Capital after the collapse of parent company Fairpoint PLC.
Financial statements published with Companies House this week show that Doorway last month acquired the entire issued shared capital due to Fairpoint and has since agreed to waive £29.6m of the acquired debt. This included £17.7m in respect of Simpson Millar LLP.
The statement reveals that in the year ending 31 December 2017, the provisional accounts of the LLP show recorded losses of £7.6m which has been funded by intercompany balance write-down and additional funding from Doorway.
The details appear as notes tacked onto the end of financial results for the previous year which show even greater losses were suffered in 2016.
After returning a pre-tax profit of £1.1m in 2015, the LLP made a pre-tax loss of £12m in 2016 on turnover for the year of £38.9m. Such losses were largely down to an impairment charge of £12.4m, without which the firm would have been in profit.
Auditors for the accounts note that further funds will be required to finance the LLP. Members have received a ‘letter of comfort’ from the parent company undertaking to provide necessary funding to support the development of the business, but this is non-contractual and there is no guarantee this funding will be made available.
Writing last week, senior statutory auditor Julien Rye, of Manchester accountants BDO, added: ‘These conditions indicate the existence of a material uncertainty which may cast significant doubt about the limited liability partnership’s ability to continue as a going concern.’
The 2016 accounts give a sense of how quickly the firm grew as owners of the listed parent company acquired a number of other businesses, including abuse law specialist Abney Garsden LLP in May 2016.
Staff numbers rose from 391 at the end of 2015 to 517 at the end of 2016. The number of fee earners increased by 58% in a year to 314. As a result annual staff costs increased from £14.5m to £18.6m.
Earlier this week, Simpson Millar made 91 roles redundant following a two-month consultation with staff. The redundancies are located across the firm’s offices and include 20 fee earners and 71 members of the back-office staff.
