Real estate insurance broker unable to meet liabilities after finding ‘cash deficiency’

Paul Leader Gary Field and Paul Williams, Allanfield Group

Real estate insurance broker Allanfield Group has decided to appoint administrators after an eight-day share-trading suspension.

In a stock exchange announcement, Allanfield said it intends to appoint Jason Daniel Baker and Philip Lewis Armstrong, insolvency practitioners at FRP Advisory, as administrators.

The broker said it has identified a deficiency in its cash resources and is seeking to understand how this has arisen.

The stock exchange announcement said: “In the absence of any further facilities being made available to the company from its existing lenders or elsewhere, the company is, or will shortly be, unable to meet its liabilities as they fall due and the board of the company has therefore concluded that, in such circumstances, the appointment of administrators is the most appropriate course of action.”

Allanfield suspended its shares from trading on the London Stock Exchange’s Alternative Investment Market (AIM) on 6 December, “pending clarification of the company’s financial position”.

The share-trading suspension followed a 21 November announcement that Allanfield had overstated revenue and profit before tax for the full 2010 and 2011 years, as well as the six months to 30 June 2012.

The company said at the time that the overstatement was caused by introducer fees being incorrectly charged to its profit and loss account.

Allanfield estimated that it had overstated of revenue and profit before tax by approximately £240,000 in 2010, £400,000 in 2011 and £195,000 in the six months to 30 June 2012. The cumulative effect was an understatement of trade and other payables by approximately £835,000 as at 30 June 2012 and to overstate retained earnings by the same amount.

Allanfield floated on AIM on 18 August 2011.