Rapid expansion and a change in the way invoices were generated were behind the failure of Slough-based Mark Priestley SDT, according to its administrator.
In a report to creditors, SFP said that during 2017, turnover at the transport company more than doubled to £9m as it took on whole contract management work for a new customer.
However, by the end of that year the directors realised “the correct foundations and employees were not held to complete the work” and it had to give up some of the contract to ensure its survival.
The report added that in 2018, a large customer requested that Mark Priestley SDT, which specialised in air freight logistics and refrigeration, change the way it billed them and asked to be invoiced for every job it undertook regardless of its value.
This decision led to 7,000 invoices being issued in one month, compared to the 35 it would have previously sent, flooding the customer’s system.
“This resulted in payment issues, queries and delays which affected [Mark Priestley SDT’s] cash flow position and impacted on payments to trade suppliers,” the report explained. “The delayed payments to the company resulted in the company falling behind with HMRC payments for both PAYE and NIC.”
Mark Priestley SDT entered administration in February 2019 and a sale of its business and assets took place on 1 March to newly incorporated company PSDT.
The report said the sale amounted to £90,000 to be paid in instalments up until January 2020, with 12 employees transferring to the company via TUPE.
The employment contract of director Daniel Priestley was also transferred by TUPE to PSDT. An additional 20 staff were made redundant from Mark Priestley SDT on 1 March.
The report said: “Kayleigh Priestley is the director of PSDT and Odette Priestley is the 100% shareholder of PSDT. Both are direct relations of the directors.”
Subsequent records show Odette ceased significant control of the business in March.
Company creditors are estimated to be owed more than £500,000, with almost £100,000 related to redundancy payments, but the administrators added: “At present, it appears possible that there will be sufficient funds to pay a distribution to preferential creditors and to non-preferential unsecured creditors by way of the prescribed part.”
