A pre-packaged sale of Staffordshire haulier Pro Freight Solutions took place following the high-profile collapse into administration of its customer, The Book People.
In a report to creditors, FRP Advisory said Pro Freight Solutions, which held a licence authorising a total of 30 HGVs out of two operating centres, first experienced financial problems in 2017 when it lost a number of customers, which historically placed around £2m worth of business with the general haulier.
In an attempt to reduce costs, it downscaled its operation before entering into a transport contract with online retailer The Book People.
However, in October 2019, six weeks into the contract, the customer already owed Pro Freight Solutions £192,000 and then it stopped trading with it altogether when The Book People failed to settle its bills.
The Book People entered administration in December 2019.
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Figures provided by the administrator showed that although turnover at Pro Freight Solutions increased by more than £1m between 2016 and 2018, net profits fell to £74,500 from £131,957 over the period.
The report said The Book People's bad debt, coupled with a fall in turnover “resulted in significant working capital pressures and an inability for the company to return a profit".
A pre-pack administration was pursued, in order to preserve employment, but despite 22 interested parties signing non-disclosure agreements, no formal offers were received.
However, Re-Sauce Solutions, which is connected to Pro Freight by virtue of a common director Craig Chance, agreed to buy its work in progress, goodwill, intellectual property and assets for £40,000.
The report added: “The customer contracts are heavily reliant on the continuation of providing services, as should the customers have to source alternative providers and remove their goods from the storage facility, this would lead to the costs incurred and counter claims against monies owed.”
