EY appointed administrator for vehicle hire firm

10 April 2018 Authored by Consultancy.uk

Hundreds of UK workers have lost their jobs after a vehicle-hire firm collapsed. As TOM Vehicle Rental was forced into liquidation, Big Four firm EY was appointed as administrator.

Scottish vehicle rental firm TOM has announced that it has filed for administration, after a protracted sales process found no buyer for the debt-ridden company. TOM previously provided long-term rentals of vans, trucks, trailers and cars as well as operating franchised dealerships under the Mercedes Benz and Citroen brands.

TOM’s collapse comes as the latest in a succession of private equity owned firms which have filed for bankruptcy, including children’s retailer Toys R Us and teenage fashion store Claire’s. TOM has been majority-owned by Equistone Partners Europe for the past 15 months, although the private equity firm suggests that it was not at fault for the collapse. Equistone is one of Europe’s leading mid-market private equity investors, and recently announced its investment in Willerby, the UK’s foremost manufacturer of static holiday homes.

EY appointed administrator for vehicle hire firm

Throughout the duration of its ownership of TOM, Equistone asserts that it injected additional capital into the business to mitigate the company's cash-flow pressures. A statement from Equistone also said that the group had worked closely with TOM's board and external advisors to address operational issues. However, TOM’s cash position did not improve sufficiently to meet the company's repayment schedule on its existing operational loans, which were in place prior to Equistone's ownership.

Now, administrators from professional services giant EY have been appointed at the company, in the absence of any proposals for running TOM as a going concern that were deemed viable by its lenders. The appointment signaled the termination of some 361 jobs from TOM’s other UK locations – Aberdeen, Ayr, Broxburn, Dundee and Nairn, and another five in England – with 86 members of staff remaining at TOM’s Airdrie headquarters for four weeks to assist the administrators, before being let go. A total of 21 posts associated with a third subsidiary, Alistair Fleming, based in Kilmarnock, will meanwhile be transferred to a new company – in a practice known as “Phoenixing”.

A spokesman for EY said, "Unfortunately, no suitable interested parties emerged from the sale process due to the scale of the losses and the investment required to turn the business around. Due to the group's lack of liquidity and increasing pressure from creditors, the directors had no option but to seek the appointment of administrators."

Joint administrator Colin Dempster added, "It is with regret that 342 people have been made redundant. Our specialist team will work with those affected to help them claim outstanding wages and other payments due from the redundancy payments office."

Related: EY to administrate Carillion as construction outsourcer collapses.

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