A substantial fire and a significantly loss-making contract were two of the main causes behind the administration of Lincolnshire waste haulage firm Mid-UK Recycling (MUK), according to PWC.
The company, which traded from seven sites and held a licence for a total of 98 HGVs, was sold in a pre-pack deal on 12 June to a subsidiary of utilities group Beauparc for £8m.
An additional £5m was paid to the owner of the Barkston site it occupied.
The move saved 420 jobs, but not before all other options were explored to save the business, which generated revenues of £37.8m in the year ending 31 March 2018.
In a report to creditors, PWC said the start of a capital expenditure programme reduced cash reserves, before a major fire at Barkston in September 2018 led to the write-off of assets with a book value of £3.4m.
The report said: “In addition, in June 2015, MUK entered into a large service contract which ran to March 2020, which was significantly loss-making, costing the business in the region of £135,000 per month (or £23 per tonne).”
Problems were exacerbated when its credit insurance was withdrawn in March 2019, meaning that MUK was unable to file its annual accounts and cash flow was hit.
Unsecured creditors, which include Cemex UK, DFDS Logistics, Mick George and Rainthorpe Transport, are estimated to be owed a total of £17.5m, but it is expected the maximum funds available to make a distribution to them will be just £600,000.
Cemex is listed as being owed an estimated £14,600.
A spokeswoman for the company said: “We don’t comment on bad debt situations because of customer confidentiality.”
