The administrator of Canute Haulage Group is locked in a legal tussle with the haulier’s one time largest customer, Wilko, over a disputed £600,000 contingency relating to a contract termination.
The end of the 29-year contract with the retailer in September 2017, which represented 30% or £30m of Canute’s annual turnover at that point, was a hammer blow that led to the firm’s collapse in May 2018 and subsequent sale.
At the time it was made public that Wincanton would replace Canute on the Wilko contract, a spokesman for the outgoing haulier claimed it would “act diligently to ensure our final days on the contract will reflect the same commitment and positive attitude we have demonstrated over the last 29 years”, but despite this a dispute arose.
As a consequence, Canute’s solicitors Birketts has been holding a credit balance of £600,000 back in regards the terminated contract but a settlement was not reached before the haulier entered the insolvency process.
According to a newly published progress report from Canute's administrator FRP Advisory, which covers the period from the 11 May 2018 to 10 November 2018, Wilko’s solicitors issued a letter of claim for recovery of the entire balance just after the haulier’s entry into administration last year.
This asserted a breach of conditions on the part of Canute under the settlement agreement, demanding the deposit should be refunded in full, something FRP Advisory has resisted, arguing that it is instead now an asset of the administration estate that should go towards paying creditors.
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Both FRP Advisory and Wilko declined to provide any detail in regards to what the dispute was about when approached by MT. FRP Advisory has also declined to provide an update beyond that set out in the progress report period.
However, a source that worked at the failed haulier explained that it centred on the situation Wincanton faced once it took control of Wilko’s transport operation from Canute. The locations involved are understood to be Manton Wood Enterprise Park in Worksop, Nottinghamshire and Magnor in Monmouthshire.
He said that while there was always a certain amount of horseplay between contractors when a change occurred, in this case “if it wasn’t bolted down it went. When Wincanton took on the site, they faced an enormous expense to put it right”.
MT approached Wilko to ask for more detail. In response it stated: “Wilko enjoyed a good relationship with Canute who for many years supported the business as its chosen transport provider.
“It’s normal for us to review significant partnerships periodically and following a competitive tender Wincanton was appointed to deliver our future logistics needs.
“As is often the case when closing substantial contracts there are loose ends to tie up and we’re keen to conclude these as quickly as possible for the benefit of everyone involved,” it added.
The collapse of Canute left unsecured creditors of the business, of which there are more than 1,000 according to the progress report, facing a shortfall of £5.3m – this figure was supplied by FRP Advisory in May and no further update has been forthcoming nor is one contained in the progress report.
The progress report does however repeat the estimate that unsecured creditors of the business will, eventually, see a payment of 15p for each pound of debt owed. However, it adds that this is based on the full recovery of the contested £600,000 and therefore could be subject to revision.
Canute’s business, brand and assets (goodwill) were subsequently sold for £1.3m on 12 May via a pre-pack administration to Almtone, a company formed by directors associated with the previous venture.
Almtone-owned Canute collapsed into administration just ahead of Christmas 2018. By then it owed creditors more than £168,000 in unpaid bills recorded as county court judgments and an amount owed to its former pallet network Pallet-Track.
