Start-up firm Trailar, which provided solar-powered panels for trailer roofs, collapsed into administration in August this year, owing £2.1m, after being hit by Covid, the Ukraine War, the international chip shortage, and a costly and failed attempt to gain equity funding, which contributed to British Gas pulling out of a £900,000 contract agreement at the eleventh hour.

This gauntlet of challenges was revealed in the recently published report on Trailar’s demise by administrator Paul Stanley of business recovery specialist Begbies Traynor.

The report reveals that the company collapsed in August this year, owing creditors a total of £2.2m, including £343,811 to HMRC and £282,697 to financial solutions firm 4Syte. There are also pension arrears of over £16,000 owed to Royal London.

Prior to calling in the administrators the business and assets of Trailar were purchased by Solar Technology for £35,001, a company owned by Denny Hulme, former co-founder of Trailar. The administrators are currently reviewing the purchase and sale agreement.

Trailar was launched as a DHL start-up in 2018 by DHL employees Aaron Thomas and Denny Hulme, as a supplier of solar panels for trailer roofs, which trials had shown could cut fuel costs by up to 5.5%.

The report revealed that the company hit the ground running, with DHL making Trailar’s product standard specification for its fleet.

However, when the Covid pandemic hit, DHL decided to withdraw its investment from all non-core subsidiaries, including Trailar.

The Trailar team decided to pursue a management buy-out, which was backed by electronics manufacturer, Darlington EMS and saw DHL agree to continue to use the company’s solar-powered solutions in its fleets across the world.

However, shortly after the MBO, Trailar was then hit by a post-Covid chip shortage, the report revealed. This forced vehicle manufacturers to scale back on the production of new vehicles, leading to extended fittings, sometimes running to more than 12 months.

To add to the company’s woes the Ukraine War saw Trailar’s supplier, which sourced parts from Odessa, cease production, forcing Trailar to seek alternative products.

By mid-2023 Trailar’s position had stabilised, the report said, and the company decided to seek external investment to help it progress to the next stage. It began talks with Maven Capital Partners UK, which managed the £660m Northern Powerhouse Investment Fund.

In October 2023, Maven made a formal investment offer, subject to a successful due diligence process.

The report said: “The entire leadership team were then catapulted into a strenuous due diligence process over the next several months, having to complete questionnaires, psychometric testing and interviews while developing business plans for rapid growth at the request of the investor.“

It added that, as a result of the “intense pressure of the due diligence and timescales” sales and revenues began to fall.

Despite this, the due diligence process was successfully completed late in December 2023 and in early January 2024 Trailar was given assurances that the investment would land imminently, the report said.

It added: “By this time, the company’s finances were depleted, and the director and Darlington EMS both injected funds to tide the business over, pending the Maven completion. In the third week in January 2024 Maven suddenly pulled out of the process.”

“The reasons given appeared spurious at the time” the report added, noting that it later emerged that Maven Capital Management had been ousted from the management of the Northern Powerhouse Investment Fund, with the fund taken over by rival Praetura Ventures.

Despite this additional setback, the report said Trailar began to rebuild and cut costs, reducing headcount “drastically” and securing orders from both existing and new customers.

This included a major £900,000 deal in May with British Gas, which the report said would secure the slimmed-down business through to the third quarter of 2024.

However, when Trailar entered an account opening process, as required under the British Gas supplier agreement, the contract was withdrawn, with the British Gas account team citing the company’s credit rating as the main reason for the withdrawal.

The report said this was the last straw. It noted: “The difficult financial position which led to the credit rating is a direct result of the failed investment. Following receipt of this news, the director sought advice, which was resulting in the company being placed into administration.”

 

 

 

Topics