Collapsed haulage firm Corporate Solutions (Logistics) was running at an almost £700,000 pre-tax loss six months before it entered administration, according to insolvency experts.
The Solihull-based firm closed in October after suffering increasing fuel and driver costs, with the implementation of IR35 rules compounding its problems according to administrators FRP.
In a report to creditors, FRP said the off-payroll working rules contributed to the driver shortage and adversely affected the haulier and the subcontractors it required to deliver customer contracts.
Corporate Solutions (Logistics) was incorporated in 1997 and, at its height, held contracts with big names such as Lidl, Ikea and Vax. The company operated from sites in almost all the traffic areas, with seven licences authorising between six and 35 HGVs.
However, rising costs and an attempt to absorb these increases, led to “creditor stretch”, including with HMRC. The haulier lost a contract with Smurfit Kappa, as well as others in August 2021, resulting in an estimated loss of £10m per annum and £1m of gross profit.
In June 2022 it lost a contract with Aldi following a re-tender process and aspects of its work with Coca-Cola fell by the wayside when the drinks giant opted to use rail for its northbound freight.
A time-to-pay agreement with HMRC was agreed, but it defaulted on the £91,000 monthly payments shortly before FRP was appointed, due to trading pressure. Extracts from financial statements showed that the business went from a £34.1m turnover company and a £368,000 post-tax profit in 2020, to a £21.9m turnover and a £694,000 pre-tax loss in the 10 months ending 30 April 2022.
The report said: “It is currently estimated that primary preferential creditors will total approximately £269,000, being the employees’ preferential element for arrears of pay, unpaid pension contributions and holiday as calculated in accordance with legislation.
“It is currently anticipated that the primary preferential creditors will receive a dividend.”
Unsecured creditors, owed an estimated £3.1m, are not expected to receive a distribution.
Motor Transport previously reported that Morrish Solicitors in Leeds was contemplating taking legal action against the firm for allegedly failing to consult with staff prior to their redundancy. Morrish did not respond.
