Fairpoint board prepares to call in administrators

Fairpoint Group was on the brink of administration on Friday, as its board said that, due to its obligations on its head office lease, it was intending to call in the administrators.

The AIM-traded company had announced on 3 July that AIB Group had assigned its debt due from Fairpoint to Doorway Capital and that, in conjunction with the assignment of debt, Doorway had provided a receivables funding facility of up to £5m to Simpson Millar LLP - the group's wholly-owned legal services business.

Fairpoint’s board said it believed that this new Facility provided by Doorway would enable Simpson Millar and its subsidiaries to continue to trade as going concerns and take advantage of the growth opportunity presented by the size and “highly fragmented” nature of the consumer legal services marketplace.

“However, ongoing support for the group's subsidiaries outside of the legal businesses is made more difficult due to the existence of the onerous lease on the group's head office which has an annual commitment of £1m per annum for a further four years,” Fairpoint’s board said.

“As a result, and following detailed discussions and the evaluation of a number of options, the board has concluded that the holding company of the group - Fairpoint Group - is no longer able to continue trading as a going concern and has filed notice of intention to appoint administrators.”

Unless financial circumstances change, and in accordance with statutory requirements, the board said it intended to appoint administrators within 10 business days.

The secured creditor could, however, appoint administrators without the requirement for notice.

Fairpoint’s board said it did not expect the announcement to have a material impact on the planned disposal of the IVA and claims divisions to a third party, as it had previously announced on 12 July.