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Mattressman has revealed that it entered a Company Voluntary Agreement (CVA) due to “inaccurate management accounts”, which led the company to believe it was profitable in Q1 and Q2 of 2017, Retail Sector can reveal.
However in March this year it was found that it was losing money during that period. In a letter from CEO Andrew Kelly to creditors dated 13 June, he described the mistake as a “disaster” and went on to say that Mattressman made commercial decisions based on the inaccurate results.
Major expansion activity including a new head office, factory and four new stores were unveiled last year. Kelly did partly attribute the firm’s troubles to a turbulent retail economy, in line with the company’s original comments on its predicament. He said the company had “no reserves left to weather this downturn in the furniture industry”.
Mattressman’s CVA will now see 15 of its 25 stores close, one more than previously announced, resulting in the loss of more than 130 jobs.
In the letter Kelly told creditors: “I am so sorry to have let you down” and said that job losses were “what hurts us all the most”. He said he was “embarrassed” and that this year is “the worst of [my] career”.
Creditors will receive a regular payment for a percentage of their goods or services under a CVA according to the letter, with Kelly saying in the event of the CVA failing to materialise, “very little or nothing” would go back to the creditors.
Despite the CVA, Kelly said business going forwards looks “healthy” and that remaining staff “will be fighting hard” to make the business work.
The bed retailer will require 75% of creditors to vote in favour of the CVA for it to be passed.
