A director of failed executive recruiter Ellis Fairbank, which went into administration last October, has spoken of his personal anguish after efforts to revive the company proved unsuccessful.

Harry Cross told Recruiter that he had “never tried harder or become more personally involved in anything” in his working life in attempts to refinance the business. “It hurts that we failed. A lot,” said Cross.

Cross, who along with fellow Ellis Fairbank director Jason Martin is a director of IHR Group, the company that acquired Ellis Fairbank from the administrators, said the directors were left “with no alternative” but to call in the administrators.

Cross blamed the demise of the company on a £18m leveraged buyout in 2001, debt which he said could no longer be serviced when the
current downturn hit.

He said that despite doing “nothing else” for an entire year but work on refinancing the company, this proved unsuccessful as funding was
dependent on higher sales than the company was able to deliver. “In any other conditions, this would have been a relatively simple process,” he said.

According to the report to creditors issued by joint administrators KPMG, the company’s debts included:

• “roughly £10m” owed to the Bank of Scotland
• more than £3.7m owed to unsecured creditors
• more than £191,000 in unpaid compensation to three ex-employees who won employment tribunal cases against the company.
• more than £92,000 in unpaid wages paid to staff who were made redundant last

October; £48,000 of this is preferential, ie. is payable before unsecured creditors.

Recruiter can also reveal that the amount payable by IHR Group for Ellis Fairbank is £198,000, of which £135,000 was deferred for 18 months.

Cross defended the right of directors to buy back the assets of companies that have gone into administration owing money. He said he understands that “to many people this can look like a cynical ploy to ditch the debt and make money for the directors”.

“At these times I think that if there is no other solution and the alternative is closure, then anything that gives a future to the employees and the business has to be the preferred route,” said Cross. In the case of Ellis Fairbank the actions of the directors had secured the jobs of 130 employees, he pointed out, and the survival of the Ellis Fairbank brand.