Pre-pack sale of Pallet Network haulier saves 28 jobs

A Lancashire haulage firm employing 28 staff has managed to avoid making them all redundant by achieving a pre-pack sale after it was heavily impacted by the Covid-19 pandemic.

SCS Logistics, which traded out of Heysham and had a licence authorising 37 HGVs, was incorporated in 2011 but according to administrators at Quantuma, the restrictions implemented as a result of the coronavirus and cost increases pushed the business to the wall.

However, in a report to creditors, Quantuma said that an initial plan to sell the business floundered when The Pallet Network (TPN), of which it was a member, said it was not willing to enter into an agreement with a buyer it was not familiar with.

The contract SCS held with TPN formed approximately 70% of its trading.

“It has been stipulated that the relationship between TPN and the company is with [directors] Sandra Cottam-Shea and Sarah Metcalfe, therefore it is likely that without the continuation of the current management, there is no real prospect of selling the TPN agreement to a third-party purchaser,” the administrators said.

Eventually, S&S Logistics, supported by transport firm Graylaw International, bought SCS Logistics for £165,000 and 28 employees transferred over as part of the sale.

Metcalfe is also a director at S&S Logistics.

“The benefit of achieving a pre-packaged sale is to maintain continuity of trade to realise value for the intellectual property and goodwill of the business, that cannot otherwise be achieved,” said Quantuma.

“A pre-packaged sale would allow the business to enter administration quickly and allow for a seamless transaction of the business to take place to a new company.”

S&S has now obtained an operator licence for 20 HGVs running out of the same Heysham depot as SCS Logistics; however, Quantuma criticised the office of the traffic commissioner for how long the application took: “The request for this licence has proven to be overly protracted, with multiple demands for additional information being received, including details of financial standing for the purchaser and details of historic bank accounts," it said.

“This was difficult to provide given that S&S is a new entity with no trading history. Accordingly, the initial application was rejected by the [traffic] commissioner.”

The administrator added: “Following continued correspondence with the traffic commissioner and evidence of financial standing provided to their requests, an interim licence was finally granted on 7 June 2023.”

TPN, via owner Culina Group, declined to comment.