The scale of the challenge faced by Saints Transport in continuing to trade in the run-up to its administration is laid bare in a report to creditors, which outlines just how tough business had become.
The air freight haulier succumbed to insolvency in August after more than 50 years of trading, but administrators at KRE Corporate Recovery said problems started back in 2016 when its Colnbrook premises were sold by the landlord.
The head office then had to be moved “at great expense” and this was followed by substantially higher trailer park lease costs due to the proposed third runway at Heathrow.
The report said: “In 2019, DHL exercised the three-year break clause in their five-year contract to take the work in-house; this had a huge effect on turnover of c£500,000 to £600,000 a month.”
The same year, a large claim was made against the company, which led to around £150,000 in solicitor costs and £80,000 in barrister costs.
“By the end of 2019, whilst cash was always tight, the company had reduced its debts, had increased profitability through efficiencies and streamlining and had renegotiated the British Airways contract to the best terms it had been on in over 115 years,” the report added.
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But disaster then struck, first with Brexit causing a large drop in volume of work and a costly reliance on agency drivers and then the “absolutely catastrophic” effect of Covid on the business: “The workload disappeared overnight, but the company’s overheads remained.”
As well as agreeing a repayment plan with HMRC, director Piers Carroll – who contracted a severe strain of the disease and ended up in intensive care - injected hundreds of thousands of pounds of funds into the business and elected not to take a wage for two months to help with cash flow, but costs continued to mount.
Saints Transport approached HMRC again to restructure its repayment plan, but when this was refused and it was unable to seek further finance, it sought help from KRE and entered administration on 1 August.
“Due to a lack of working capital and the loss of the company’s main contract [with British Airways] the joint administrators did not consider it possible to restructure the existing business or propose a company voluntary arrangement,” KRE said.
It is currently not anticipated that company creditors will receive a dividend.