BC Transport owed almost £1.5m when it was placed into administration earlier this month, and unsecured creditors are unlikely to recover any money despite the subsequent sale of the business.
The Bollington-based haulage firm was purchased in a pre-pack deal by Kinaxia Logistics on 5 December, after earlier efforts to market the firm by Duff & Phelps attracted interest but no firm offers. The sale saved 50 jobs.
According to BC Transport’s statement of affairs, Kinaxia Logistics paid £40,000 in full for the business.
This comprised 31 vehicles, fittings and fixtures, IT, stock, the books and record and IT system. Goodwill amounted to just £1 of the sale price.
However, Kinaxia Logistics also took on £752,703 of the £792,319 of book debt the business had amassed as part of the acquisition.
However, this still left finance providers Close Brothers Asset Finance, Close Brothers Invoice Finance and Genesis Asset Finance £80,000 out of pocket collectively.
It also meant that despite the rescue deal and the transfer of the majority of book debt, unsecured creditors – HMRC and trade – are unlikely to recover any of the £693,085 they are owed.
Fighting a losing battle
In December 2016 A2e purchased the business from Christopher Goodwin for £1.8m. This was funded by a combination of equity investment from the new owners, the company’s cash reserves, working capital and finance facilities secured against the company’s assets.
According to administrators Duff & Phelps the increase in fuel prices in 2017 relative to 2016, combined with a mechanism that only allowed periodic price reviews with its customers, was one pressure point.
A switch to use more sub-contractors rather than its own fleet to move palletised freight in a bid to mitigate dips in demand backfired after general sales fell. This left its vehicles underutilised and reducded gross profit.
As part of a handover period after the sale, the business also found itself employing two MDs. With the sales situation deteriorating this went on for a longer time than expected, adding unexpected expense.
In addition, costs associated with the sale and a downturn in the company’s general trading performance saw it fall into arrears with HMRC.
Although a deal was struck with the tax man to repay the debt after November’s payment BC Transport stumbled due a further deterioration in trading.
This prompted the marketing of the business, by Duff & Phelps, and when that proved unsuccessful the pre-pack sale, which completed in December.
