Reverse charging has claimed its first big victim this week. Following a fruitless search for a new buyer European Telecom went into administration today.
Earlier this month Emblaze who had a 51% share in European Telecom offered the Essex based distributor up to rivals as it was not prepared to carry on funding the loss making business after only a year and a half.
Lloyd Briscoe of corporate recovery firm Begbies Traynor, appointed as joint administrator, regretfully told Mobile Business that there will be redundancies, no jobs will be saved and staff will not be paid outstanding wages.
ET have left the industry owing over £8m to various creditors. However, the distribution company was owed a considerable amount back, the majority of which being £8.4m in VAT reclaims owed by HM Revenue & Customs relating to the handset trading side of the business.
Asked if the money held by HMRC was a direct contributor in the company going into administration Briscoe replied in no uncertain terms yes, "The £8.4m held by HMRC caused an enormous cashflow problem" he added.
HMRC declined to comment on their possible involvement in European Telecom's situation stating that any dealings between the distributor and the government department were confidential.
A source close to European Telecom confirmed the distributor was in receivership but stressed it was not in liquidation and could therefore still be sold as a going concern.
Begbies Traynor will now be trying to maximise realisations on behalf of the creditors with the sale of assets including stock and airtime contracts.
Lloyd Briscoe of corporate recovery firm Begbies Traynor, appointed as joint administrator, regretfully told Mobile Business that there will be redundancies, no jobs will be saved and staff will not be paid outstanding wages.
ET have left the industry owing over £8m to various creditors. However, the distribution company was owed a considerable amount back, the majority of which being £8.4m in VAT reclaims owed by HM Revenue & Customs relating to the handset trading side of the business.
Asked if the money held by HMRC was a direct contributor in the company going into administration Briscoe replied in no uncertain terms yes, "The £8.4m held by HMRC caused an enormous cashflow problem" he added.
HMRC declined to comment on their possible involvement in European Telecom's situation stating that any dealings between the distributor and the government department were confidential.
A source close to European Telecom confirmed the distributor was in receivership but stressed it was not in liquidation and could therefore still be sold as a going concern.
Begbies Traynor will now be trying to maximise realisations on behalf of the creditors with the sale of assets including stock and airtime contracts.