Optimum Procurement Rises From The Ashes After Client Dispute

It is not often we are shocked, but this article yesterday on the Insider business website came as a big surprise. Optimum Procurement Services, owned and run by ex CIPS President Peter Rushton and Mike Jones, has gone into administration, and then the key assets have immediately been bought back by Rushton and Jones with their newly incorporated company Optimum Procurement Ltd. (Their energy services firm sits outside all of this by the way).

KPMG are the administrators of the previous firm, and say that other offers for the business were sought through January, but although there was interest, no firm offers were forthcoming in the time available.

The issues go back to late 2015 when the business lost two large clients, according to the KPMG SIP 16 memorandum, and started having cash flow problems. In November 2016, the shareholders injected a sizable amount of their own money in order to keep things going – and pay the staff - while an attempt was made to settle a conflict over money Optimum claim is owed by one of the ex-clients.

It looks like that dispute was the key issue here. The KPMG document suggest it is a substantial amount of money in dispute, but we don’t know who that client is or why they have not paid what Optimum believes is due.

The main debts were a £500K overdraft with HSBC and £350K owing to HMRC, which could be VAT, PAYE or NI related (or all of those).  There is not a lot in the way of assets, other than this disputed claim, and KPMG is clearly going to go after this money on behalf of the creditors.

“Given the nature of the claim, it was crucial to keep the key stakeholders together to preserve the knowledge required to successfully pursue the claim. These key stakeholders included not only the owners of the business, but also key employees within the business who in a shutdown scenario would have to be made redundant, and would therefore have to source new employment. Loyalty to the current business would diminish, as would their wish to assist the administrators in pursuing the claim”.

The 20 or so staff have all transferred under TUPE to the new company, and we understand that it is very much business as usual with existing clients and a good pipeline of potential work across the procurement services, fleet and energy business. That covers procurement outsourcing, consulting and transformation services work in both the UK and in the Middle East, where the firm has a presence in Dubai.

We’ve always seen Rushton and Jones as two of the “good guys” in our business and it is sad to see this happen, but encouraging that the business continues with key staff still in place. Obviously we’d love to know more about this dispute; if it goes to court, I guess we will. But in the meantime, we wish the firm and the individuals in it well in getting back onto a growth track.





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