Ortak, which used a series of famous names to promote itself and has 15 retail outlets in Scotland and England, has blamed the recession and the rising cost of raw materials. Since the beginning of the financial crisis, the cost of silver has risen by about 800 per cent.
Ortak, founded in 1967 by jewellery designer Malcolm Gray, employs 155, including 44 on Orkney, where the company has its headquarters and manufacturing base. Insolvency specialist BDO has been appointed as administrator in an effort to sell Ortak as a going concern.
An Ortak spokesman said: “The board regrets to announce that, after an exhaustive review of the business, we feel unable to continue to trade outside of insolvency protection and has appointed BDO as administrators to provide a breathing space in order to explore a sale of the business as a going concern. The current business model has come under pressure over the past few years, as the recession has impacted on the high street and the cost of raw materials has increased significantly.”
News of the threatened demise of the long-established company shocked Orkney.
Liam McArthur, Liberal Democrat MSP for the islands, said: “This is a very worrying development and my thoughts are with the staff, particularly the 44 based in Orkney, at what must be uncertain and anxious times.
“I know every effort is being made by the management to limit the impact on the business, and I have been reassured by the minister that he and his officials stand ready to provide any assistance necessary.”
He added: “Ortak is a strong, popular and iconic Orkney brand. Despite the difficult trading conditions, I hope that these attributes will enable the company to weather this storm.”
Steven Heddle, the convener of Orkney Islands Council, described the news as a “major blow”. He said: “Ortak has grown over more than 40 years to be a major local employer.”
BDO business restructuring partners James Stephen and Graham Newton have been appointed joint administrators and have confirmed they intend to continue to trade Ortak in an effort to secure its sale.
Mr Stephen said: “Our priority is to thoroughly review the business and determine what the available options are. The company will continue to trade.”
He added: “Ortak is a well-known and iconic brand with a highly skilled workforce. The company holds significant stock levels, which will support trading for the foreseeable future.”
The company was launched in Kirkwall 46 years ago. It grew steadily to become one of the UK’s leading designers and manufacturers of gold and silver jewellery. Ortak has two retail outlets on Orkney and shops in Aberdeen, Dundee, Inverness, Stirling, Livingston, Newcastle and Sheffield, plus two in Edinburgh and four in Glasgow.
Ortak suffered pre-tax losses in 2012 of £77,336, against profits of £111,452 the year before, despite turnover increasing by about £35,000 to £7.3 million.
In a Christmas marketing drive, Ortak recruited dancer Flavia Cacace, star of BBC’s Strictly Come Dancing, as the “Face of Ortak”. She followed Sarah Parish, Carol Smillie, Myleene Klass, Amanda Lamb and Suzanne Shaw.