Norton Motorcycles skids into administration
31 Jan 2020
Classic bike maker Norton Motorcycles has collapsed following legal action over an unpaid tax bill, and faces challenges over the operation of its pension scheme
31 Jan 2020
BDO has been appointed as administrators to Norton Motorcycles (UK) Ltd after Metro Bank called in the firm as financial problems mounted.
Earlier this month Norton was in court following a winding up petition from HMRC over a disputed £300,000 tax bill over research and development (R&D) tax relief. Now it has ceased trading, putting around 100 jobs at risk.
In the latest accounts for year end March 2018, filed in April 2019, CEO Stuart Garner said that ‘intangibles had grown significantly over the last three years as the business has invested money into the research and development of new engine platforms and motorcycle ranges, being the V4 and 650cc model ranges’.
However, the auditor’s report by HSKS Greenhalgh indicated that there was material uncertainty related to going concern, with pre-tax profits of just £33,701, with a year end loss after tax of £1,537. This was set against liabilities of £3.38m based on £6.7m turnover. It also flagged incorrect reporting of development costs and government grants in prior years.
A £1m crowdfunding drive launched by Norton Motorcycles in November 2019 was halted after the company reported only a single investor showed interest. At the time, the business said it would use the extra funding to increase the production of its new models, the V4 and 650 range, which have generated a £30m order book.
Lee Causer, a partner at BDO, said: ‘As joint administrators, we are taking all necessary steps to ensure that customers, staff and suppliers are supported through the administration process. Our job is to determine and execute the most appropriate strategy as swiftly as possible to protect creditors’ interests, bearing in mind the need to minimise distress for all parties.
‘We are currently assessing the position of each of the companies in order to conclude upon the options available to them and the most appropriate way forward.’
Two other of Garner's companies are also in administration, including his 42-bedroom Priest House Hotel in Castle Donington.
Garner said: ‘I'm devastated at the events over the last 24 hrs and personally have lost everything, however my thoughts are with the Norton team and everyone involved from customers, suppliers and shareholders at this truly difficult time.
‘Without dialogue Metro Bank appointed BDO administrators yesterday, we are now working positively and pro actively with BDO to ensure Norton has the best possible chance to find a buyer ASAP.
‘It has become increasingly difficult to manufacture in the UK, with a growing tax burden and ongoing uncertainties over Brexit affecting many things like, tariffs, exports and availability of funding.’
Garner also faces challenges over the operation of the Norton Motorcycles pension scheme. The Pensions Ombudsman listings show a hearing scheduled for 13 February as part of it investigation of a complaint made by 30 applicants against Stuart Garner in his capacity as the trustee of the Dominator 2012 Pension Scheme; the Donington MC Pension Scheme; and the Commando 2012 Pension Scheme (the Schemes)); and, where applicable, LD Administration Ltd (in its capacity as administrator in relation to the Schemes, from 2014 to 2018).
In November 2018 the Pensions Ombudsman upheld a complaint against Garner relating to refusal or late payment of some £48,000 which an individual was seeking to transfer out of the Commando 2012 Pension Scheme, and which had been invested in preference shares with Norton Motorcycles (UK) Ltd.
Established in Birmingham in 1898 and one of the few remaining British motorcycle companies still maintaining involvement in motorsport, Norton Motorcycles fell into financial difficulties in 2008 but was rescued by Stuart Garner, an entrepreneur and property developer, who moved production to Castle Donington.
Additional reporting by Sara White