Erinaceous, the debt-ridden property services company, yesterday called in administrators after the failure of a three-month battle to secure a rescue deal.
Erinaceous, which is thought to owe its creditors more than £200m, announced a strategic review of its business in January, following months of uncertainty about its financial position. However, it has been unable to find a solution to its woes, despite holding discussions with creditors about a refinancing of its debts. A rights issue was also ruled out.
The company is expected to sell its insurance business, Erinaceous Insurance Services, to concerns owned by its lenders. However, in a statement, it said this would not enable it to continue as a going concern. It said: "Given the extent of the challenges facing the group and the current state of the capital markets, it has not been possible for the group to reach an agreement with its lenders and other creditors."
Erinaceous has lost 99 per cent of its market value in the past 12 months, with a dramatic collapse in its share price last autumn prompting calls from shareholders for a management shake-up.
Neil Bellis and Lucy Cummings, formerly the company's chief executive and chief operating officer, quit in November, with chairman Nigel Turnbull stepping down from his post in February.
Last month, hopes were briefly raised that Erinaceous was close to agreeing a debt-for-equity swap with its banking creditors, though this would still have left shareholders with sizeable losses. However, the company said yesterday that even this proposed deal had now been shelved.
Erinaceous has about 4,000 staff in 200 locations. It originally sold its services as a "one-stop property shop", offering a range of facilities to residential and commercial real estate investors.
However, problems first surfaced at the company two years ago, after a series of mooted bids from suitors including HBOS and the property tycoon Vincent Tchenguiz never materialised. It was also hard hit by allegations of fraud against one of its subsidiaries, Dunlop Hayward.
In addition to its profitable insurance business, Erinaceous said its residential management and property maintenance divisions would remain outside the insolvency process.Reuse content