Euro Car Parts has denied that it bought rival parts supplier LSUK with the intention of closing it down.The suggestion had arisen after ECP put LSUK into administration with the loss of 600 jobs nine days after the rescue on September 29.
An ECP spokesman said: “Nonsense – LSUK was never a significant competitor.”
Although LSUK supplied car parts to independent repairers, its focus was on diesel engine and commercial vehicle parts to fleets and local authorities.
ECP Logistics, the acquisition vehicle for LSUK, was closed by administrator Tenon Recovery on October 6. As a result, all 53 LSUK branches were closed.
ECP said it rushed into the acquisition without taking due diligence because LSUK was due to go into administration on September 28 and close a day later as it couldn’t pay that month’s payroll or its quarterly rents.
At least two other parties were interested in the business, but LSUK felt ECP was the best option.
Only in the days after the acquisition did ECP comprehend the true state of the business.
ECP said: “It had become clear that it was simply not going to be viable to continue without the support of suppliers, customers, and staff, which was not forthcoming.
The entire organisation was in a state of decay.”
Despite the deal being overseen by Grant Thornton, ECP claimed the business information it received from LSUK prior to purchase was “simply not accurate”.
Chris Oakham, Trend Tracker analyst, said: “I find it astounding that due diligence wasn’t taken.
“Our guess is that the bank loan facility was not available when ECP took over.”
He also believed it was unlikely ECP bought LSUK just to close it down.
“It’s an expensive way to close a company,” he said.