LINDSTRAND HOT AIR BALLOONS LTD.
Private Limited Company
Registered at Companies House Number 04058541
Creditors' Voluntary Liquidation - 13 April 2015
Lindstrand Hot Air Balloons Ltd has ceased trading and has now
been placed into Creditors' Voluntary Liquidation following a Directors
meeting on 13 April 2015. The liquidator, who will deal with all affairs,
Mr. Graham Down, Licensed
Sweet Corporate Recovery
15 Pembroke Road
A meeting of creditors will be held on 23rd April;
further details will be announced by letter.
notice: Lindstrand Hot Air Balloons Ltd Liquidation - Background to recent
There has been a number of false rumours passing around and strong feelings expressed following the closure of the Lindstrand Hot Air Balloons Ltd factory on Monday 13th April 2015. For this reason, I am setting out fuller information that, in other circumstances, might have remained with those involved.
Balloon making in Oswestry has been a history of loss-making enterprises. Investors’ capital has been used repeatedly to sell below cost until failure occurred. I have had difficulty understanding this, because the business is basically similar to that of Cameron Balloons Ltd. which has always operated without outside investment and, in most years, at a modest profit.
Thunder Balloons started in the early 1970s. It was financed by a rich gentleman who could easily afford the losses and was doing it for fun. Colting Balloons was founded in Ireland and ended with some difficulties. Thunder and Colt Ltd was then founded in Oswestry, using some locally available subsidies. In 1994 it went into receivership with unpaid debts of around £1.4M.
There were two spin-offs. Before the T&C failure, Per Lindstrand, its managing director, had left the company and had set up Lindstrand Balloons Ltd. After the failure, some employees formed a new company, Sky Balloons Ltd.
From the beginning Sky Balloons Ltd. sold very cheaply and were refinanced a number of times. The final owner sold the company to Cameron Balloons Ltd. for a fraction of his initial investment. When the prices were raised to a break-even level, sales dried up. The Sky operation was used as a satellite sewing shop for a while, but when work levels declined it was closed.
The financier of Lindstrand Balloons Ltd was discontented having seen a substantial loss on his investment. In 2000 he sold his 67% interest to Cameron Holdings Ltd. (the parent company of Cameron Balloons) for about a quarter of what he had originally invested. Per Lindstrand held the other 33%. Although relations were amicable, both parties preferred to have their own business and, in 2003 the company was split: Per Lindstrand became 100% owner of Lindstrand Technologies Ltd. and CHL became 100% owner of Lindstrand Hot-Air Balloons Ltd.
Because the balloon purchasing community tends to show a loyalty to a particular balloon manufacturer and to preserve the jobs of the existing staff, CHL decided not to merge LHABL with CBL. Simon Forse and his management team were left in charge and although CHL appointed two directors, they took no part in the day-to-day management. LHABL was told that its independence could continue on condition that it did not make an operating loss; no profit was demanded. CHL purchased the building separately and let it to LHABL at a low rent which was never increased since 2003 and provided it with a loan to give working capital.
Over the last three years, business has declined and the loan from CHL began to increase alarmingly. In 2013 redundancies were necessary. It was beyond the means of the company to pay the required amounts to departing staff, so CHL advanced money in return for ownership of the intellectual property rather than adding to the loan.
The trade continued to decline due to increasingly restrictive regulation from EASA and the worsening of general market conditions. Increasingly, balloon purchasers demanded, and received, larger and larger discounts.
When the draft accounts were received for 2014 it was clear that heavy operating losses had happened for the third year in succession and the economies of mid 2013 had not had enough effect. By early 2015 suppliers were being paid many months late and any deposits received were immediately swallowed up paying overdue bills. Some employees were illegally being paid less than the national minimum wage. Worst of all, the pension contributions collected from the employees over eighteen months had not been forwarded to the pension provider leaving a £30,000 backlog (except Simon Forse’s pension which was paid throughout). When the CHL directors became aware of this in April 2015, the matter could not be ignored. (I have now been told by the liquidator that redundancy, holiday pay, notice pay, pensions and the shortfall in minimum wage will all be paid to the staff in full.)
At the board meeting at Oswestry on 13th April 2015, it was decided that, with the outlook so poor, the company would not be able to meet its obligations and continuing would only make matters worse. Options to allow continued trading were considered, but none were feasible without very substantial further investment. It was decided to appoint the liquidator.
Cameron Balloons Limited is currently working with the European Aviation Safety Agency to become the approved type certificate holder for Lindstrand balloons enabling the provision of continuing airworthiness support for all operators of Lindstrand Balloons certified equipment. Such support will include the supply of new parts, components and complete balloons.
Current customers’ who have placed deposits with the company for balloon orders will become creditors and will only be refunded a small fraction of their money. Although there is no legal obligation to do so, Cameron Balloons Ltd. has decided to replace any lost deposits from its own funds and will do its utmost to ensure that balloons are delivered as expected.
I apologise that there will be some delays while the insolvency procedures take their course, but Cameron Balloons Ltd. will do its best to make the transition as easy as possible for all customers.
Bristol, 7th May 2015