The boss of a firm set to lose thousands of pounds after a provider went into administration branded it “unjust” that another company could operate with the same board of directors, based in the same offices — having also taken over the same training contract.
M2 Training, that was responsible for 4,000 learners, had a Skills Funding Agency contract last year of £5.175m, but went into administration in December, owing creditors around £1.1m.
Among those owed money by the firm, which carried out training in the automobile and IT sectors, were HMRC at £637,000 and Edexcel at £93,000.
However, the agency had allowed the firm’s business to switch to Work Skills Limited — which had the same six directors as M2 and was based at the same Gloucestershire address as M2, according to Companies House documents.
The directors, FE Week understands, raised £150,000 to buy M2 from administrators Janes Insolvency Practitioners.
That money would go towards paying off M2 creditors, said administrator David Hughes.
The two parts of the company — engines and training — were not compatible anymore”
But Swindon-based car dealership Fish Brothers was owed more than £3,000 by M2 and its finance director Keith Butler said he was unhappy.
He claimed administrators told him it was “anticipated” he would receive up to just 15 per cent of what he was owed.
Mr Butler said it was “unjust to have been left out of pocket while a new company started, carrying on as before”.
He said: “No creditor is happy about getting back 10 to 15 pence in the pound. It will have a negative effect on our business.”
However, Work Skills director John Henry, formerly also a director of M2, insisted that creditors of the old company “would not be left out of pocket”.
He defended their decision to put M2 Training into administration. Mr Henry said M2 had started out training drivers but grew to include professional qualifications before getting involved in research with fuel efficiencies and engine management research.
This expansion, he said, had led “M2 to administration”.
“The two parts of the company — engines and training — were not compatible anymore,” he told FE Week.
“Rather than having an amalgamation of businesses we want to focus on training. I personally am confident that this is going to be a high-quality training provider.”
Administrator Mr Hughes said the switch to Work Skills was the “better alternative” for learners as well as the 100 employees whose jobs had shifted from M2.
“All the people owed money by M2 have been written to and told about the process,” he said.
“They will get a good percentage of their money back. The price that Work Skills paid for the business will fund a dividend for M2 creditors.
“We will know in about two weeks’ time how much money the creditors will be paid.”
The agency declined to comment on why it allowed the contract to shift from the company that went into administration, to another firm with the same board of directors.
A spokesperson for the agency said M2 requested to shift its contract to Work Skills in May 2012. The request was approved through the agency’s “standard processes” and took place in November 2012, she said.
“Following the novation [shift] Work Skills Limited took on all the responsibilities of the contract previously held by M2 Training Limited, including those that had accrued prior to the novation,” she said.