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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

30 APR 2009

LDV enters administration - a repeat of history for an off shoot of Leyland DAF

A letter on the blog website of LDV notes that the company has applied to go into administration. Here is the letter:

"Dear employee,

I have to write to you today to notify you that despite all our efforts over the past few months, we have so far been unable to secure the investment required for the business. During the past few weeks, the global economic crisis has forced us to operate in exceptional conditions and we cannot continue in this position without funding indefinitely.

We are still working with potential overseas investors who want to keep production in Birmingham, but they like many people at this time are finding it difficult to secure the necessary funds.

We must now inform you that the deterioration in the position of the business has forced the directors to apply for administration. I must stress that this does not mean the business is in administration yet. Our application will be processed on 6 May and we still have until that time to secure funding for our plans.

The effect of this change in position to your payments is as follows:-

Both hourly paid and staff have been paid up to the end of last week and at his point, the company is unable to confirm any further payments.

As a result of this, only the senior management team will report for work until further notice and all employees are requested to leave he site after this briefing and await further information at home.

I want to thank you for your support to date and assure you that we will continue to fight to secure the funding and valuable jobs here at LDV up until the final deadline.

Evgeniy Vereshchagin
LDV Group Limited"

The BBC have picked up on the story and report it in the following way:

"Struggling van maker LDV has applied to enter administration, a letter to staff on the firm's website says.

Chief executive Evgeniy Vereshchagin said LDV would continue to look for funding until 6 May when its court application was due to be considered.

He said employees had been paid up to the end of last week, but that the firm could not confirm any further payments. Staff were told to stay away from work.

Birmingham-based LDV could not be immediately reached for comment.
Most of LDV's 850 production workers were laid off in December, when production at the plant largely stopped.

"During the past few weeks, the global economic crisis has forced us to operate in exceptional conditions and we cannot continue in this position without funding indefinitely," Mr Vereshchagin said in the letter.

Earlier, Erik Eberhardson, the chairman of LDV's Russian owner Gaz, said he believed that LDV could be saved and the management buyout was the best option.

Two overseas investors had also been said to be interested in the company.

The cancellation of the 2010 British International motor show and a record drop in UK car production are the latest signs of trouble for a sector that has endured a bleak existence for months."

There are of course historical parallels with this case. The judgment in Re Leyland DAF Ltd [1994] B.C.C. 166, tells the story of a previous brush with insolvency law for a forerunner of the LDV business.

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