Dunlopillo goes into receivership

ERJ staff report (DS)

Harrogate, UK -- Dunlop Latex Foam Limited, the parent of Harrogate-based Dunlopillo has gone into receivership, due to pension fund issues. About 155 employees are affected.

Howard Smith and Richard Philpott, of KPMG's Restructuring practice were appointed as Joint Administrators on 2 September 2008 and are currently assessing the prospects of trading the business in the short term whilst seeking a going concern sale.

Dunlop manufactures latex foam pillows, blocks and sheeting for the worldwide bedding market. Its products are sold around the world under the Dunlopillo brand through key regional distributors into the premium end of the niche foam bedding market segment.

The company was acquired by its existing shareholders in 2007 when a new management team was put in place. A strategic review was carried out and a turnaround strategy was implemented in 2008. The business made a small operating profit of approximately £400,000 for the first seven months of 2008 compared to an operating loss of £100,000 for the year in 2007.

The directors had secured funding to relocate an element of the business overseas. The funding was conditional upon the resolution of the company's pension fund deficit, which did not prove possible. Combined with significant cost base increases and the economic slowdown, this served to undermine the turnaround strategy. As a result the directors had no alternative but to place the business into administration.

Howard Smith, Joint Administrator, said: “Dunlopillo is one of the few truly worldwide brands in the sector that is immediately recognisable to the customer. We are continuing to trade the Company while discussions take place with both external investors and trade buyers in an attempt to secure a going concern sale.”

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Press release from Administrators