Davis Haulage, which was sold to Buffaload Logistics for £1.8m late last year, got into trouble after overextending itself, according to a report from administrator Leonard Curtis.
The business, which traded from Crewe Distribution Centre Gateway spent £1.8m paid for through working capital on a new leasehold premises in 2013/14.
However, uptake for its new dedicated chilled storage area was slower than anticipated, delaying rental revenues.
A downturn in trade in 2014, which saw margins squeezed as overheads increased, resulted in a £414,000 loss for the year ended 31 December 2014.
While a sale and leaseback of some of the business’s fleet bought it some time, it accrued arrears of more than three-quarters of a million to HMRC in respect of PAYE and NI and entered into a Time to Pay Agreement (TPA).
The administrators’ report states that a partial sale of the business (50%) for £1m reached an advanced stage but ultimately fell away.
The company defaulted on a series of TPAs with HMRC until the owner of Widdowson Logistics (which is now in administration), HLD Group, purchased the struggling business on 18 February 2016, placing it into a Company Voluntary Arrangement (CVA) shortly after.
After a CVA to pay £1.5m over five years was agreed, Davis Haulage suffered another blow when a major customer withdrew its storage work, which accounted for £24,000 of revenue a month, according to Leonard Curtis.
The business remained loss-making (trading losses for the seven months to 1 April 2016 were £104,000 excluding CVA contributions) and after falling into arrears again it was placed into administration in 2016 and sold in a pre-packaged sale process to Buffaload.
The move saved 175 jobs but left unsecured creditors and CVA creditors owed £4.7m, with HMRC is owed more than £2m.
The administrator has said it is unlikely unsecured creditors will receive their money back.
In the ten months to 31 October 2016, Davis Haulage had turnover of £12.8m and made a pre-tax loss of £115,000.
