A successful transport company with an operating centre in Immingham collapsed after losing 80% of its business in a single hit when a customer chose sea freight services over road haulage, according to its administrator.
In contrast to many recent insolvencies in the sector that have had fuel costs and a chronic driver shortage rooted at their core, Chambers and Cook (Eastern) traded successfully and met its ongoing obligations in the face of increasing operating costs up until this summer, according to BK Plus.
But the administrator said a significant adverse event occurred in July when its largest customer elected to transfer its transport requirements by sea rather than road.
“The sudden loss of this customer resulted in a substantial reduction in revenue and had an immediate and material impact upon the company’s financial position and cash flow,” it said in a report to creditors.
At this point, with a licence authorising a total of 20 lorries and 150 trailers running out of the Lincolnshire port town, Chambers and Cook’s directors reviewed the company’s ability to continue trading and realised it could not do so solvently.
BK Plus was appointed on 13 August and determined the business should be wound up.
“Immediately upon the appointment of the joint administrators, 16 employees were made redundant,” it said.
BK Plus added that unsecured creditors were estimated to be owed almost £2m, with about £1.8m of this due in respect of trade and expense creditors.
However, it is thought there could be sufficient funds to enable a return to this class of creditor:
“Creditors should note that the precise quantum and timing of any distribution will depend on the level of realisations, mainly the recovery of book debts, deduction of costs, and the amount due to the preferential creditors,” it said.
“The current range of returns to unsecured creditors, based on the prudent scenarios, is 33.6 – 54.3p in the pound.”
