Lotus Cars Threatened with Winding-up Petition
October 09 2012
The Independent reports that Lotus Cars faces threats of winding-up petition(s) from unpaid suppliers and has losses running into millions
The scale of the problems facing Lotus Cars was laid bare yesterday with new information showing that its Malaysian owner is facing legal action from a number of suppliers over non-payment of debts – said to total £23m – and has asked the Inland Revenue to delay tax payments to conserve cashflow.
DRB-Hicom, the owner of the Norfolk sports car maker, was not available for comment, but sources close to the company said many of the outstanding issues – including payments to suppliers – relate to the previous management. They added that in some cases DRB-Hicom is challenging some of the arrangements with suppliers over previous contracts where there are concerns over quality control. But they also repeated that DRB remains fully committed to the plant at Hethel, its workforce and turning Lotus around into a self-reliant and global brand.
A final plan to make Lotus self-sufficient should be ready soon following due diligence work being carried out by the consultants Ernst & Young and Rothschild.
However, the enormity of the clean-up operation facing Aslam Farikullah, the new Lotus chief operating officer, is clear. According to internal financial results for August seen by The Independent, the company owes suppliers up to £23m at 90 days overdue, and another £7m between 30 and 90 days. Suppliers include ARM, Logica and OCS. One person close to the group said: “One petition has already been lodged with the company, and several others are outstanding. But the danger is that someone may sue for winding-up.” Losses, after exceptional items, interest and tax, for the last five months to August are shown to be running at £23.6m.
The document states:”Cash flow: Critical. Overhead base is massively too high for current business, payroll bill for business is too high. Salaries top-end loaded.” It also states that there was “insufficient inflow to meet this month’s [September] supplier payments and payroll” and that “NO business decision can sustain its own costs or contribute towards group costs. Revenue = £45m, overheads = £35m, Cost of sale s= £33m – Loss = £23m.”
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