Jobs lost East Kilbride Merchant City Distributors Limited collapses

Merchant City Distributors Limited, based in Kelvin Industrial Estate, ceased trading and made all 18 of its employees redundant.

The closure follows 25 years in business and has been blamed on "detrimental supply chain issues" that left the company with no viable future.

James Stephen and Ben Peterson of BDO have been appointed as joint administrators, reports our sister title, the Herald.

In a statement, the administrators said: "Following detrimental supply chain issues, the directors concluded there was no viable future for the business and ceased to trade.

"Consequently, they took the difficult decision to appoint the joint administrators, with 18 employees subsequently being made redundant."

Merchant City Distributors supplied, distributed and installed gas and electrical products.

Mr Stephen of BDO said: "The challenging business environment impacted the company’s ability to trade and the Directors unfortunately saw administration as the only option.

"Our focus now is on processing employee claims and realising the company assets for the benefit of creditors."

The Insolvency Service said administration is a process that protects a company from legal action and allows proposals to be put to creditors to re-structure the company.

An appointed administrator usually has two months to provide a statement outlining its proposals.

In February, there were six administrations in Scotland.

Overall, 98 company insolvencies were recorded during the month, a 5% decrease compared to the same period last year.

These included 50 creditors’ voluntary liquidations, 39 compulsory liquidations, six administrations, two receivership appointments and one company voluntary administration.

In February, Thornliebank-based lighting retailer Pagazzi Lighting entered administration and shut 11 stores, resulting in 70 job losses.

BTG (formerly Begbies Traynor) was appointed as administrator.

The company, a 45-year-old family business, had previously restructured but continued to struggle with increased operating costs and cash flow issues.

Thomas McKay, managing partner of BTG, said: "The retail sector has seen some very tough months of late in Scotland and this has also affected the lighting sector, mainly due to increasing competition and high trading costs.

"Reduced margins, slower consumer spending and rising operating costs are creating challenges for many high street retailers, and unfortunately, these are the main factors that saw the Pagazzi stores and concessions no longer able to trade.

"The 11 affected stores closed on Wednesday, after BTG consulted with staff about the anticipated closure.

"Sadly, there have been 70 redundancies arising from the unavoidable closure of the retail outlets that were no longer able to trade.

"We are working closely with these individuals affected to assist them with access to their entitlements in conjunction with Partnership Action for Continuing Employment (PACE) and the Redundancy Payments Service, as we provide these staff members with the support and advice they need."

Despite the collapse of the retail business, Pagazzi Lighting (Web) Limited, the company’s online retail division, has acquired the business and assets and will operate from a handful of key retail outlets in Scotland.

Administrators will now focus on processing employee claims and realising the company assets for the benefit of creditors.