Staff at failed Harrogate company Amvoc are likely to receive some payment following its collapse, administrators have said.

However, HMRC and unsecured creditors are unlikely to receive any money due to a lack of property.

The telemarketing company, which was based at Cardale Park, collapsed and was placed into administration in March this year.

Staff were left shocked on March 17 when they received a late night email from chief executive Damian Brockway saying “all our offices are closed with effect from tonight”. It went on to blame “covid debts”.

In a report published today, Gareth Lewis, Lewis Business Recovery and Insolvency, said the company would work to make a payment to staff as part of the administration process.

As part of the process, former employees are classed as “ordinary preferential creditors”.

However, HMRC, which is classed as a “secondary preferential creditor”, and unsecured credits are expected to receive no money.

Mr Lewis said:

“A dividend to ordinary preferential creditors appears achievable.

“However, it appears that there will be no property available to enable a distribution to secondary preferential or unsecured creditors.”

Read more:

• Administrators reveal state of Harrogate firm Amovc’s finances
• Hundreds of job losses as Harrogate company goes under
• Collapsed Harrogate firm Amvoc set to enter administration

The company owed £1.2 million to HMRC, which included unpaid VAT, unpaid employees PAYE and national insurance, student loan deductions and industry scheme deductions.

In an administrators’ statement of affairs last week, it was also revealed Amvoc owed £546,534.71 to former employees against assets of £302,802.63.

It also has £868,267 worth of unsecured creditors. Among them is Hemel Hempstead-based data marketing firm, Aura Media Group, which is owed £154,467.38.

Mr Lewis said administrators would now work to make a payment to preferential creditors.

High staff turnover and winding up petition

Mr Brockway set up Amvoc, the trading name of A Marketing Vocation Ltd, from a small office in Dacre in 2010. It sold telemarketing services, initially in the legal sector, and grew rapidly, moving first to Pateley Bridge and then to large offices at New York Mills near Summerbridge.

It opened a new head office on Cardale Park in Harrogate in 2015, a facility in Leeds in 2018 and an office in Manchester in 2022.  It also had plans to expand to London.

At the time of its collapse, Amvoc employed 230 staff.

Mr Lewis said in his report that in September 2017, the company entered into a company voluntary arrangement as a result of “cash flow difficulties” because of the loss of a major customer and “significant bad debt”.

He helped the company pay its creditors claims in full with interest, which was completed on March 31, 2020. However, this coincided with the start of the covid pandemic.

Gareth Lewis of Lewis Business Recovery and Insolvency.

Mr Lewis said the nature of Amvoc’s trade was such that it had “high fixed overheads”, a high staff turnover and that it was not equipped for the pandemic.

He said:

“It had a constant high turnover of employees, regularly having 20-30 employees leave and start each month.

“It was not equipped at the outset of the pandemic to facilitate working from home and also could not operate safely in the ‘call centre’ environment.”

In August 2020, despite the easing of restrictions, Amvoc’s offices were closed by Public Health England after 50 staff contracted coronavirus.

Meanwhile, many of the company’s customers held back on projects due to uncertainty of the pandemic. This led to the firm being unable to generate sales from telemarketing.

Between, April 1, 2020, and September 30, 2021, Amvoc reported a pre-tax operating loss of £1.7 million.

The following year, the company reported a pre-tax profit of £350,000. However, this was not enough to pay off debts.

Mr Lewis said:

“This was insufficient for the company to meet its debts as and when they fell due, most notably HM Revenue and Customs, who by this stage had increased pressure on the company.”

On March 13 this year, Mr Lewis attended Amvoc’s offices to discuss the company’s financial position.

He then contacted HMRC, who had indicated they would be passing a file to its solicitors to issue a winding up petition. This was formally issued on March 16.

The following day, a company director took the decision to inform staff that the company would no longer be trading.

Staff were told by Mr Brockway on March 17 that all Amvoc offices would be closed.

Amvoc’s clients included BP, Barclays, Virgin Media, Leeds Beckett University, and both the Conservative and Liberal Democrat parties.

Twenty-three former employees found work with Brighton-based One-Family, which was a former customer of Amvoc.

Meanwhile, Law firm Aticus said in the days after Amvoc’s collapse it had been contacted by 145 former employees.

The law firm said it was investigating the circumstances of the company’s collapse and concerns around how the redundancy process was managed, as well as whether ex-staff are eligible to claim for compensation.