Administrators to sell Aero Inventory

Administrators for the aircraft parts wholesaler plan to put the company up for sale in the third quarter of this year, to coincide with an upturn in the aerospace sector.

The move comes as an investigation was launched into the conduct of chartered accoun­tants and its former auditor Deloitte after Aero Inventory’s collapse in 2009.

Aero Inventory was placed in administration in November 2009, having suspended its shares just weeks previously after the wholesaler said it had discovered “issues” with the valuation of certain stock and warned it was likely to breach non-financial covenants on its bank debt.

Jim Tucker, partner at KPMG and lead administrator, said: “What has made this administration unusual is that we as administrators, with the backing of the lenders, have invested tens of millions of dollars to build this brand-new business model.”

Mr Tucker was appointed administrator after the company’s financial backers refused to put up the cash to keep the struggling business afloat.

At the time of its collapse, some 40m aeroplane parts, worth $400m, were strewn across the globe in 130 locations. The administrators have struck a deal to settle in part with customers to buy a quarter of the stock, while helping in the relocation of remaining inventory to a central hub in Singapore.

The group owes senior lenders, including Lloyds Banking Group, some $500m (£307m), but they will not be repaid in full. The debt market’s price indicates that lenders face recovering only 20 per cent of that. Unsecured creditors and shareholders’ claims were wiped out.

Meanwhile, the Accountancy and Actuarial Discipline Board of the Financial Reporting Council, the UK’s corporate reporting watchdog, said on Thursday that it had launched an investigation into the conduct of members of the Institute of Chartered Accountants in England and Wales and of Deloitte as auditors in connection with events leading up to the administration.

Deloitte said it was confident it had properly fulfilled its responsibilities as auditor and that it would co-operate fully with the investigation. Deloitte had refused to sign off the 2009 audit as it could not agree the stock valuations put forward by the management.

Source: ft.com

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