Noise issue silenced Arctic Circle
5th April 2023UK: Inflation, project delays, stock control issues and a dispute with a supplier are all said to have contributed to the recent demise of Hereford-based refrigeration company Arctic Circle.
Birmingham-based FRP Advisory Trading were appointed administrators of the 38-year-old business on February 7. “Economic headwinds” and an “ongoing legal dispute” were blamed as the reason for Arctic Circle’s failure.
According to the latest administrators statement, Arctic Circle had built up retained earnings to March 2021 of around £2.8m, but started to experience some difficulties through 2022. In addition to inflationary pressures, there was excessive stock build up due to project delays and stock control issues.
The effects of the dispute with an unnamed supplier is said to have had an adverse impact on key customer projects which led to customer payments being withheld. Arctic Circle had been involved in several projects where the ultimate customer had set a maximum noise level output for Arctic Circle’s refrigeration units. The completed units did not meet the customer’s noise level requirements, resulting in the customer withholding payments. Arctic Circle attributed this issue to the housing units from a third-party supplier.
Despite initially engaging with the supplier to identify modifications to the design of the housing units, the changes still did not achieve the required sound levels. The customer continued to withhold payments resulting in Arctic Circle withholding payments to the supplier.
A creditor issued a winding up petition against Arctic Circle on 24 January 2023 and subsequent mounting pressure from other creditors the business was placed into administration.
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