Woodall Group was kicked out of The Pallet Network (TPN) because it owed the Eddie Stobart-owned business £350,000, according to the firm's administrator.
The Birmingham transport company entered administration in February and Duff & Phelps is currently realising property in order to pay secured and preferential creditors.
It is unlikely trade creditors, estimated to be owed £1.1m, will be paid.
Woodall Group was the trading name for Woods (Haulage), which incorporated in 1942.
According to the administrator, it traded profitably in the years ending 31 October 2015 and 31 October 2016.
However, during the following year the balance on reserves fell from £321,143 to a deficit of £167,107. Management accounts prepared to 31 October 2018 showed that this deficit had increased to more than half a million (£501,153).
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In a report to creditors, the administrator said: “Between 2017 and the appointment date, the directors made the decision to move the pallet network contracts to Rico Logistics, whilst continuing to bear the costs of the service provided.
“This significantly reduced turnover, whilst overheads continued to increase.
“This decision was made as the company’s pallet network provider terminated the contract due to being owed circa £350,000.”
The report added: “This transfer resulted in the company being unable to pay debts as they fell due and the directors met with insolvency practitioners to discuss this position further.
“Due to significant creditor pressure and HMRC arrears, the directors were advised to place the company into administration.”
Departure
In December 2018, director Richard Woodall told motortransport.co.uk that the haulier was no longer working with TPN, which it had worked with since 2010, but he did not give the reason why.
However, a source close to the situation disputed the administrator's official narrative.
They said TPN had attempted to help the business address areas of under-performance, but Woodall Group had ultimately failed to meet the level required by the network and the businesses parted ways for this reason alone - the unpaid monies were accrued after the operator left the network.
The source added that once VAT was accounted for the debt owed by the operator to TPN is around £240,000
Duff & Phelps has previously said the rising cost of fuel was one reason why it failed. The administrator had not responded to requests for further comment as this article was published.
Duff & Phelps was approached and asked to respond to this but no further comment has been forthcoming.
TPN was approached for comment.
