Craft Channel Productions Limited

Craft Channel Productions Limited (the “Company“), a non-trading company that held the lease for premises used by its parent company, Ideal Shopping Direct Limited (ISD), entered administration on 16 February. ISD was a leading multi-channel home shopping provider in the UK. It used the premises to store stock and paid for the costs of the lease.

The key factor of the Company’s administration was the failure of ISD, which also entered administration on 21 February. ISD was positively impacted by the national lockdown during the COVID-19 pandemic, which resulted in favourable trading conditions as many people ceased commuting and had more time available to watch TV and partake in hobbies. However, this changed during the second and third quarters of 2021, and by the fourth quarter, monthly losses reached a level of close to £1m, which was unsustainable.

In their Proposals delivered on 12 April, the Joint Administrators stated that the purpose of the Administration of the Company was to achieve objective (c) set out in the insolvency legislation, namely to realise property in order to make a distribution to one or more secured or preferential creditors of the Company.

The Joint Administrators have now released their Progress Report, outlining a potential legal issue with the administration.

Although no distributions are expected to be made to secured or preferential creditors from the Company’s administration, the administration of the Company allowed the lease for the premises to continue for a short period to allow Hochanda Global Limited, the purchaser of certain ISD assets stored at the premises, to uplift them in accordance with the sale agreement. This will help to fulfill the statutory purpose in the administration of ISD, which will include making distributions to the charge holder to discharge a liability of which the Company is a co-guarantor.

The Joint Administrators are awaiting legal advice as to whether this will fulfill the statutory purpose of the Company’s administration, since no direct distributions are expected to be made from the Company’s administration. If not, the Joint Administrators will likely need to make an application to Court to end the administration.

In any event, Hochanda removed all assets by close of business on 29 March and the lease was formally surrendered on 26 July.

Martin Armstrong and Andrew Bailey of Turpin Barker Armstrong are the Joint Administrators. They are assisted by Katten Muchin Rosenman.

The full report can be found HERE.