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Apr 16, 2024

Report sheds light on watch repair firm’s failure and rescue

More details have emerged about the administration of a North West-headquartered watch and jewellery repair business and how it was rescued by one of the region’s most successful family companies.

More details have emerged about the administration of a North West-headquartered watch and jewellery repair business and how it was rescued by one of the region’s most successful family companies.

In-Time Watch Services entered administration on 5 January 2023, with Geoffrey Paul Rowley and Anthony John Wright of specialist business advisory firm FRP appointed as administrators. On their appointment, they immediately secured a pre-pack sale of the company to national services retailer The Timpson Group.

A sale of the majority of the business and assets of the company was completed across two separate transactions by the administrators. An initial sale of the company's watch and jewellery repair business was sold to ITWR Ltd, a subsidiary of Timpson, with a second sale of the company's watch strap and bracelet business to a second purchaser, Hirsch The Bracelet UK Ltd.

In-Time, which has been trading since 1981, provides repair services from 38 locations across the UK. The business operates two dedicated shops, as well as kiosks within a range of department stores including John Lewis and previously Debenhams.

The company had a total of 104 employees across these sites, including those employed at the firm's freehold property and head office in Southport. Robert Hirsch, also managing director of the company's ultimate parent company Hirsch, acted as its sole director.

According to a report filed by FRP, revenue generated by the company had decreased significantly throughout the three financial years to 2021, with the business also moving from a marginal net profit position in FY19 to a net loss position of £293,000 and £895,000 in FY20 and FY21 respectively.

A statement of administrators' proposals report said the insolvency of Debenhams, one of the company's key customers in late 2020, led to significantly decreased revenues generated via the sale of watch straps and the firm's service line offering. Government Covid-19 lockdowns also considerably reduced retail associated revenues and subsequently the company's net profit line throughout the same period.

Despite mitigating actions taken by the board in an attempt to rescue the business, including the opening of additional retail kiosks throughout 2021, performance did not improve, and Hirsch opted to cease further funding to the company putting immediate extreme pressure on cashflow.

The report said the company's board took the decision to seek professional restructuring advice with regards to the firm's financial position in December 2022 via their legal adviser Fladgate LLP.

Due to the lack of cash, the company was quickly deemed unable to continued trade as a result of being unable to make payment for staff wages on 23 December 2022. A decision was made cease the company's trade entirely on 22 December 2022.

However, the report said in the 24 hours following the cessation of trade, a number of parties came forward to express their interest in purchasing the company's business and assets despite trading operations having already ceased.

Following brief discussions with one of these parties, described as "a well-known, credible retailer in the same space", the decision was made to alter the insolvency strategy from a CVL and progress with marketing the business and assets for sale via a pre-packaged administration. The report said this was clear that "realisations could be enhanced, and jobs could be saved as a result of this interest despite there being no trading business".

The document said that following the conclusion of the marketing process, two interested parties proceeded to enter discussions with FRP and the board with regard to the purchase of the company's business and assets. These parties included Timpson.

It was subsequently agreed that Timpson's offer should be accepted, "as it represented the best outcome for creditors as a whole".

An offer of £20,000 was subsequently received from Hirsch to purchase the company's WS&B Business. Following negotiations regarding the terms of any proposed agreement over the following days, a business and asset sales agreement was subsequently completed on 10 January 2023.

Law firm Osborne Clarke assisted in progressing the sale to Timpson which was completed on 5 January 2023.

Osborne Clarke also assisted with the sale of the company's WS&B Business which was completed on 10 January 2023.