An Avonmouth-based haulage operator collapsed after coming under “significant financial pressure” when its membership of Pall-Ex was terminated, according to its administrator.
David Kemp and Richard Hunt of Exigen Group were appointed joint administrators of UK Freight Services Ltd on 30 July and they are now focused on what it said was “preserving and maximising value for creditors and other stakeholders”.
“The company is not continuing to trade,” Exigen added in a statement.
“Instead, the administration has focused on realising the company’s assets and recovering outstanding book debts, which represented a significant asset of the business.”
Asked how the business ended up collapsing into insolvency, Exigen said: “The company, which operated from Avonmouth and specialised in freight transport by road, had been under significant financial pressure following the loss of its membership of the Pall-Ex pallet network.
“The company had been heavily reliant on the network, and its termination had a significant impact on its ability to operate.
“This was compounded by wider pressures affecting the haulage sector, including rising fuel and vehicle costs, margin pressure, and difficulties around driver availability.”
Pall-Ex was approached by Motor Transport for comment and in response a spokesperson said it was the loss of a customer of UK Freight Services that precipitated its exit from the network:
“We work closely with our independent regional members, providing operational, financial and commercial support where appropriate,” the spokesperson said.
“UK Freight Services made us aware of the unfortunate loss of a major client due to relocation, which meant the business was ultimately unable to continue trading.
“Our shareholder members are essential to the success of our network, and it’s unfortunate when a regional partner is unable to overcome wider pressures facing their business.
“Our priority is to provide the highest quality of services across the Pall-Ex network, and we have taken proactive and positive action to provide service continuity for our customers and strengthen our network in this area.”
Exigen said an additional consideration in the administration was the impact on a third-party business operating as a sub-tenant from the company’s premises.
“We granted that business a licence to occupy the premises, allowing it to continue trading while it made alternative arrangements and helping to minimise unnecessary disruption.
“The case highlights the importance for businesses of understanding their reliance on key commercial relationships and having contingency plans in place should an important customer, supplier or network relationship unexpectedly change.”
Administrator David Kemp said: “This case shows how quickly a business can be affected when an important commercial relationship breaks down.
“UK Freight Services was heavily reliant on its Pall-Ex network, and once that relationship ended, it had a significant impact on the wider business.
“While businesses cannot always prevent these situations from arising, understanding the risks associated with key commercial relationships and having a clear plan can help businesses respond more effectively when circumstances change.”
Exigen said asset realisations were expected to be sufficient to repay the secured creditors in full, with a distribution also expected to be available to preferential creditors, including employees and HMRC.
