When Accident Repair Management Services, the Gloucester-based work provider, collapsed in April, few predicted the size of the impact it would have on repair businesses across the UK.
At the time of Arms' demise accountancy firm KPMG — the appointed administrators — said the company was suffering from “cashflow difficulties” and there was little option but to wind it down.
But the fall-out from that decision has left many bodyshops in crisis. Many businesses had already paid for panels, labour rates, technicians and courtesy cars and were left with no clear indication as to how they could retrieve the outlay.
Industry insiders put the collective amount owed to bodyshops at as much as £4m.
Leading organisations in the bodyshop industry have been quick to rally round their members to offer advice and assistance in claiming back money for work already carried out.
MVRA members alone are owed around £700,000 and the trade organisation has been quick to offer assistance.
“Our members have suffered significant losses and we are committed to helping where we can,” said MVRA head of customer services Roy Smith.
“We are now actively working with members — both by supporting them on a one-to-one basis, but also by coordinating the MVRA response and taking legal advice to ensure that any action we do take is as effective as it can be.”
The latest creditor meeting, held earlier this month, has done little to ease the anger and confusion that exists in the industry, with insurance company Endsleigh bearing the brunt of criticism.
According to the Body Repair Industry Campaign, repairers learnt at the meeting that Endsleigh Insurance had agreed to pay all outstanding accounts of repairers who were not in the Arms network.
Bric claimed the insurer had exploited a clause in the Arms contract that seeks to limit the obligation of Endsleigh to pay for repairs once it had paid Arms.
The campaign group said that by pursuing that line Endsleigh was “washing its hands” of its liabilities to its former repairers who had been part of Arms and for whom Endsleigh was the principal customer.
“This clause raises in repairers' minds concerns about whether it is justified in the circumstances of the collapse of Arms. Certainly they would not expect insurance underwriting agents to rely on such a questionable clause,” said Shaun O'Reilly, Bric research director.
“Repairers should never sign agreements with these sorts of clauses in them but they wouldn't get the work unless they complied.
“Insurers or their underwriting agents should never be inserting these clauses in agreements in the first place.”
O'Reilly claimed Endsleigh had relied on a get out clause after its own action had “triggered the collapse of Arms in the first place”.
The organisation has now drawn the matter to the attention of both the DTI and the FSA but until any further action is taken many repairers will remain in the red.