Paragon Precision Engineering Limited

The administrators of a collapsed engineering company are considering the best course of action to recover dividends which appear to have unlawfully been paid to the company's shareholders.

Paragon Precision Engineering Limited, a Cambridgeshire-based, full-service engineering company, entered administration on 25 February 2022, after the effects of the COVID-19 pandemic left the company with fewer staff, increased material prices and jobs that only generated marginal returns and, in some cases, losses.

The company had traded profitably until the year ended 30 April 2021, when turnover reduced materially and a loss of £60k was reported.

Following their appointment as Joint Administrators, Conrad Beighton and David Griffiths of Leonard Curtis considered the information acquired in the course of appraising and realising the business and assets of the company, together with information provided by the company’s directors and creditors, to identify what investigations may be appropriate.

They discovered that the company may have distributed unlawful dividends to shareholders in the year ended 30 April 2020 when the company did not have sufficient reserves. Accordingly, they engaged Leonard Curtis Legal to to assist with this matter.

In their latest Progress Report, the Joint Administrators described the matter as “commercially sensitive”, advising that communications are ongoing, and that they are still reviewing information to establish the full position with respect to the unlawful dividends.

The Progress Report can be found HERE.