The B2B media company Inside Media Limited have published a report on the administration of Direct Golf UK and have reported that it could leave a shortfall of more than £13m, including almost £8m to trade and expense creditors.
According to a report by insolvency firm Duff & Phelps, which is overseeing the administrations of Direct Golf UK, sister business John Letters Golf and their parent company Powerhouse Golf, the success of the retailer attracted Sports Direct, which invested over £2m as part of a new £10m working capital facility in order to help Direct Golf become the market leader.
However, an after–tax profit of £107,000 included in the audited accounts for 2013/14, and signed off by the company’s board, was later restated as a loss of £4.7m following a review. Management accounts for April of 2015 were also restated down by £1.4m.
As a result of the accounting irregularities, representatives of Sports Direct and professionals advising the then-directors of Direct Golf UK consulted insolvency specialists. It was, however, Duff & Phelps, which took control of the insolvency process, appointed to Powerhouse Golf on 1 October 2015, Direct Golf UK on 16 October and John Letters Golf on 19 October.
Mr Andrew, who established Direct Golf UK in 1991, told GOLF RETAILING in the November issue of the magazine that, “At this stage all I can only say is after owning and running my own business in the golf industry for 30 years I am shocked and stunned at the recent unforeseen events. The support myself and my fellow Directors have received from the industry has been incredible and I would like to thank them for that.”
The business and assets of Direct Golf UK were subsequently sold to an entity controlled by Sports Direct for £299,994 on 19 October. The outcome for unsecured creditors of Direct Golf UK is dependent on the proceeds to be raised by the administrators from debt collection and an asset sell-off. An early estimate suggests there will only be £543,376 available for unsecured creditor claims totalling £13.97m.