Classic car sales have been on a tear for the past decade but that hasn't insulated one of the biggest names in the business from becoming insolvent
British firm JD Classics, a dealer of classic cars but also an expert restorer and organizer of classic racing events, entered administration on Friday, a process similar to bankruptcy protection here in the United States.
Richard Beard, Mark Firmin and Richard Fleming of Alvarez & Marsal were appointed as joint administrators of JD Classics Holdings Limited, JD Classics Limited and Daytona Bidco Limited, which together have an inventory of over 100 classic cars.
“The administrators, Alvarez & Marsal, are reportedly hoping to find a buyer for the business,” Clive Robertson, who heads the firm’s classic car group, said in a release. “In the meanwhile, there will be considerable concern amongst a diverse group of parties who will be affected, including staff, investors, lenders, trading partners and not least, those with cars at the Mayfair and Maldon premises for sale or restoration.”
The administrators may have to end up selling assets to recover funds for lenders, key among which is thought to be Lloyds Bank.
It isn’t clear where JD Classics ran into trouble but in a sale document seen by Sky News in August, Alvarez & Marsal mentioned the discovery of “financial irregularities” and an ongoing “investigation into these matters.”
“It may be some time before the full picture emerges, so it could be premature to be seeking to know what lessons, if any, can be learnt, but it may be no more simple than saying, that in such a relatively new and fast-growing industry, balance and reason may have been left behind, so that more deliberation and responsibility needs to be brought to transactions by dealers, buyers and sellers,” Robertson said.
This is the same company that in June hired former Lotus CEO Jean-Marc Gales to replace founder Derek Hood. Hood, who is no longer with the company he founded in 1987, was sued by a customer earlier this year and in April received a judgment of “deliberate and dishonest conduct” in his dealings with the customer, according to Sky News.