Workers' redundancy payments in doubt as Stag runs out of steam

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A disastrous attempt to relocate a factory has led to job losses for around 750 furniture makers. Many face a long and agonising wait for their redundancy money.

A disastrous attempt to relocate a factory has led to job losses for around 750 furniture makers. Many face a long and agonising wait for their redundancy money.

Stag Furniture, one of the UK's best-known makers of tables and chairs, went into administration earlier this month, a little over a year after the management bought the business from its ailing parent, bathroom and kitchens group Spring Ram.

The management, which paid just £4.5m for the company, had a scheme to streamline its manufacturing, which was based on two sites in Nottingham. However, it could not find an acceptable new home there, and decided to move to a state-of-the-art 360,000 sq ft factory in Scunthorpe, which it leased from its former owner, Spring Ram.

Few of the 400 staff based in Nottingham were prepared to move to Lincolnshire, and nearly all of them were made redundant by the move, which took place in May.

However, Stag's financial difficulties mean that none of the £1.1m redundancy money owed to them has yet been paid out. Allan Graham, a partner at KPMG, the administrator, says he is liaising with the GMB trade union about the situation, but that there appears to be no money available. The Government may have to foot the redundancy bill.

That is not the end of the bad news. Stag took on 250 staff at Scunthorpe to run its new factory, but they have had to be laid off by the administrators, who also had to close another factory owned by the company in Bradford, with the loss of 100 more jobs.

Mr Graham admitted that prospects for those who were laid off look bleak. "We believe there is strong demand for the name and we are in discussions with various interested parties, but I am not certain that any purchaser would take on the manufacturing facilities," he said.

Stag's management buy-out was completed in May last year, a couple of months before Spring Ram succumbed to a bid from a US rival.

The kitchens and bathrooms group, which was founded by Bob Murray, chairman of Sunderland football club, and Bill Rooney, had been one of the City's darlings in the late 1980s.

However, it ran into difficulties in the early 1990s, with falling profits and a series of unsuccessful property deals. Institutional investors, led by the Prudential, moved to oust Mr Rooney.

He was replaced by Roger Regan, whose son, Andrew, is now facing fraud charges following an unsuccessful attempt to take over the Co-operative Wholesale Society three years ago.

But Spring Ram's fortunes did not revive under the new management. After years of under-performance, coupled with large losses, it was bought by US Industries, the makers of Jacuzzi whirlpool baths, for £81m.

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