Risk Analysis: SHEARSBY BATH (UK) LIMITED

1. Risk Rating: HIGH

The company is in Liquidation status with deeply negative net assets, severe liquidity deficits, overdue statutory filings, and a workforce that has nearly halved. The going concern assertion in the February 2023 accounts appears fundamentally undermined by the subsequent liquidation status. This represents a failed business with no realistic prospect of recovery as a going concern.

2. Key Concerns

Concern 1: Formal Liquidation Status

The company's status is recorded as "Liquidation" at Companies House, indicating formal insolvency proceedings have commenced. This supersedes the going concern basis adopted in the February 2023 accounts and confirms the business cannot continue as a viable operating entity. Any investment consideration is moot—the company is being wound up.

Concern 2: Technical Insolvency with Deteriorating Liquidity

Net assets stand at -£59,747 (February 2023), meaning total liabilities exceed total assets. More critically, net current liabilities are -£261,160—the company owes £261k more in short-term debts than it holds in short-term assets. Cash has declined from £71,827 (2022) to £36,494 (2023), a 49% reduction in a single year. The current ratio is approximately 0.41, indicating the company cannot meet its near-term obligations from its current asset base.

Concern 3: Significant Creditor Exposure and Related-Party Debt

"Other creditors" within current liabilities total £349,424, representing the vast majority of amounts due within one year. This figure, combined with the PSC structure (Houston family ownership), strongly suggests these are director or related-party loans funding the business. While this may have provided flexibility, it also means the company is entirely dependent on the continued forbearance of connected creditors. The director's loan of £29,139 (owed by the director to the company at 2.5% interest) is a further complication—this receivable may be difficult to recover in liquidation.

3. Positive Indicators

Trajectory of Loss Reduction

Net assets improved from -£246,138 (2021) to -£148,298 (2022) to -£59,747 (2023). This represents a cumulative recovery of approximately £186k over two years, suggesting management took meaningful action post-COVID to reduce losses. The P&L reserve moved from -£246k to -£60k over the same period.

Tangible Asset Base

The company holds £235,567 in tangible fixed assets (leasehold improvements and fixtures/fittings at a licensed restaurant), which may retain realisable value in a liquidation scenario, though likely at a discount to book value.

Low Trade Creditor Exposure

Trade creditors of £36,718 are relatively modest, suggesting the company was not running up significant unpaid supplier debts at the balance sheet date.

4. Due Diligence Notes