Fruehauf’s collapse can be attributed to a toxic mixture of Brexit, Covid-19 and a global shortage of materials, according to its administrator.
In a report into the trailer maker’s descent from a leading manufacturer of tipping trailers holding 90% of the market share, Quantuma Advisory said unverified draft accounts for the year ending 30 September 2020 showed a significant loss of £2.7m.
The administrators said since the business was incorporated in 2010, it was renowned for its production, quality control and techniques.
However, it added: “The company’s difficulties can be attributed to the change in trading terms with the EU following Brexit, coupled with the disruptive effects of Covid-19 to the supply distribution chain and a global shortage of materials, particularly electronics, which has resulted in a marked reduction in sales volume and gross margins.”
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As a result, its Grantham factory closed down periodically and Fruehauf also utilised the government’s furlough scheme due to the slowdown in business.
The report said two of its directors, David Thomson and Navneet Ahluwalia, raised concerns with the way the company had been run prior to their appointment as directors, the validity of outstanding debentures over Fruhauf’s assets and debts owed by group undertakings.
Both directors made an application to the court to appoint administrators and Carl Jackson and Tauseed Rashid at Quantuma were appointed on 5 August.
Separately, UHY Hacker Young was appointed by another director, Iain McKeand, in both his personal capacity as a secured creditor and on behalf of another secured creditor Red Circle Investments.
A sale of the business was later completed to MV Commercials in a deal worth £1.25m and helping to secure the jobs of around 100 workers.
The administrators added that unsecured creditors are not currently anticipated to receive a dividend.
