A pre-packaged sale of Leicester transport firm AM Widdowson and Son was the culmination of a torrid two years that included the loss of contracts, under-estimated fuel costs and management systems that were not fit for purpose.

The company entered into administration on 6 July (CM 21 July) after falling into arrears with its contributions under its company voluntary arrangement (CVA), which had seen it pay creditors 36p in the pound since July 2015.

A letter to creditors from administrator Leonard Curtis said the company struggled with many problems after the CVA was agreed.

These included the loss of contracts that weren’t replaced, the under-estimation of fuel costs as a percentage of transport sales, the over-estimation of rent reduction and a customer claim resulting in the non-payment of £192,000.

It also said that HMRC wanted to take enforcement action to wind up AM Widdowson and Son, so administration was sought to protect the business and assets.

It was sold on the same day it went into administration for £2.5m in a pre-pack deal to Widdowson Logistics, a connected party incorporated at Companies House in May, soon after the company’s name was changed to Loglecdissol.

“Administration was the most suitable insolvency procedure for the company as it allowed the business to be preserved while the possibility of selling it as a going concern was explored,” the letter said.

All 220 employees were transferred to the new business under Tupe regulations.

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