The administrators were called in this week when it became apparent that on-going cashflow problems due to unsold stock of DVD games last Christmas were not going to be resolved and recent efforts to sell the business had failed.
Joint administrator Andrew McTear of McTear Williams & Wood in Ipswich said: “Financial problems had occurred as a result of poor Christmas trading when the company was adversely affected by the national downturn in sales of DVD games.
“In 2005, the company benefited from being one of the first players in the DVD games market but in 2006 the market was saturated and the company failed to meet its sales forecasts.”
He added that in 2005 there were only around 25 DVD games in the market but this had grown to close to 250 games the following year.
“Upstarts had a good year in 2005 as they had great products in a good market,” he said.
“They were expecting 2006 to be bigger still as the market moved towards the DVD games format, but what happened was that everyone jumped on the bandwagon and there was a lot of competition and consumers were confused as to which products were good and bad.
“They were left with huge quantities of unsold, slow-moving stock which hit their cashflow.”
Upstarts will continue to trade whilst a buyer is sought for the business and assets as a going concern. However, given the seasonal nature of the games market, with sales predominantly carried out between August and November ahead of Christmas trading, McTear said a sale would need to be agreed within a month as orders for products to manufacturers in the Far East involved long lead-in times.
“We need to get a deal done so that the purchaser has the time to get listings with distributors and place the orders.”
He added that the firm's directors had been in talks with several interested parties over the past few months regarding a sale, and two have already approached the administrators.