The loss of major clients, a potential £3million tax liability, a company restructure and pressure from creditors were the key reasons for the agency being bought by MediaCom through a pre-pack administration, a report by administrators Begbies Traynor has revealed.
Brilliant lost two major clients in March last year: its £90m DFS account to MediaCom and its £12m ASDA account to Carat.
The report by joint administrators Bob Maxwell and Rob Sadler found that Brilliant, which posted a £39,000 pre-tax profit in the year ended March 31, 2010, had a £5.5m loss a year later, including exceptional costs of around £5m.
Assets acquired by MediaCom, which paid £1 for the business but took on more than £2.1m of liabilities, included goodwill, plant and equipment and marketing information.
It is reported that secured creditors PNC Business Credit and WH 424 are owed a total of almost £2m and are set to be repaid in full, while unsecured creditors are estimated at £7.76m and are not expected to be repaid.
Currently, the MediaCom buyout is being investigated by the OFT.