Insolvency specialists extend administration of Ely company that went bust owing millions after ‘protracted negotiations with debtors’
PUBLISHED: 06:15 22 April 2018 | UPDATED: 12:27 23 April 2018
Insolvency specialists Grant Thornton has posted an update on their attempts to unravel the affairs of an Ely company that went bust a year ago with multi million pound debts and nearly 300 creditors.
Administrators were called into the Cambridgeshire grain merchant Wellgrain in March of last year and although they had hoped to conclude their work by March 1 the affairs are so complicated an extension has been approved.
The administrators Matthew Richards and Daniel Smith of Grant Thornton explain in their latest update that collecting monies due has been complicated by financial problems at Wellgrain’s largest debtor, a Suffolk flour mill.
Marstons of Icklingham owed £3,264.537 and Grant Thornton said strategies were put in place to recover this sum on behalf of Wellgrain creditors.
However when Marstons itself fell victim to the recession and a creditors’ voluntary liquidation recovery put in place, it became more difficult. With the Marston debt split between a company and personal guarantee, a shortfall of £2.3million is now subject to protracted legal challenges.
The administrators say the company was owed £1.346 million by its parent company, Driftwell Investments Ltd, and although a part payment was made, just under £1 million remained outstanding. Last month a winding-up order was made against Driftwell and the Official Receiver has passed the case to other administrators from Grant Thornton.
Mr Richards and Mr Smith say their original estimate of costs of £300,000 for their work has been exceeded and at March 1 the bill stood at £353,000.
They say this has come about because of the “protracted negotiations with the debtors” and the work on petitioning Driftwell and creditors voting to establish a creditors’ committee.
“It is not anticipated that our firm’s time costs will be recovered in full and any unrecovered time will be written off,” they state.
Wellgrain earned its money by trading grain, cereal and other related products and annual revenues had risen since its inception in 2003. By 2015, for instance, it was turning over £90 million a year.
But late payments became an issue and so they arranged for an invoice discount provider – the Royal Bank of Scotland – to help. But with cash flow still an issue and a poor crop in 2016, Wellgrain’s position worsened.
Although the sale of a subsidiary in France helped, the administrators state that in February last year “we understand that the directors had uncovered some inaccuracies within the financial record”. Days later Wellgrain directors met, realised they had no cash, the invoice discounting facility had been withdrawn, and the company could no longer pay suppliers.
“Accordingly the board concluded that the company was insolvent,” they administrators noted.