The vast majority of creditors of collapsed food business Tillery Valley Foods are unlikely to receive anything back, joint administrators have confirmed.
In a proposal report, which has now been approved by creditors, Timothy Bateson and William Wright of insolvency firm Interpath, said the business was put into administration by its directors in May after a sales process to find a new owner, despite agreeing increased prices with customers, failed to result in a deal.
The Welsh Government was looking to back a management buyout of the business, which it said was made more challenging after the freehold interest in the factory site was sold last December in a sale and lease back deal.
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Impacted by significant inflationary pressures, particularly on its energy and food costs, for the financial year 2022, Tillery Valley Foods suffered losses of £900,000 on revenues of £25m. For the five months to March 17th this year, the business incurred losses of £900,000 on revenues of £9.8m. The business, originally set up in 1986, had a string of NHS and local authority supply contracts across the 海角视频.
The joint administrators said: “We considered whether it was possible to trade the business in administration, however this was not deemed a viable option due the lack of funding/support, a withdrawal of key customers in the lead up to the administrators appointments.”
On entering administration more than 200 jobs were lost with immediate effect, with 21 staff kept on to support the joint administrators in asset realisation. That number has since been reduced to nine.
Tillery Valley Foods was acquired by private equity backed firm Joubere Group from Sodexo in 2021. The acquisition was funded by a combination of funds injected by GQS and Arbuthnot. It is anticipated that primary secured creditor Arbuthnot, will recover all of its £1.26m. Tillery Valley Foods’ debtor book was assigned to Arbuthnot under an asset-based lending agreement in August, 2021. At the time of administration the debtor position was £2.2m.
However, based on current estimates the joint administrator said it is unlikely that GQS, the secondary secured creditor, will recover any of the £108,000 it is owed.
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Their report adds that it is “highly unlikely” that there will be a dividend to unsecured creditors. The unsecured creditors are collectively owed £3.7m. These include Swansea-based Welsh Bakers with £10,732, London-based Smartest Energy £884,344, Bridgend-based Coppice Alupack £70,112, Kent-based Brake Bros £345,953, Blaenau Gwent Borough Council, £54,160 and Welsh Water £8,868.
The joint administrators said it is uncertain whether preferential creditors, will receive a dividend.
The freehold ownership in the 120,000 sq ft factory and nearly seven acres of land was acquired last December by a company called Cable Property Management. According to the Land Registry, Cable Property Management - whose directors are Abraham Gelley, Charles Edward Blackbourn and Eliot Mosafi - paid £1.5m for the freehold interest and then leased the site back to Tillery Valley Foods.
The three are also directors of food group Joubere which acquired Tillery Valley Food. Joubere is backed by private equity firm Cable Capital Partners, for which the three are also directors.
The freehold in the site, which the joint administrators said was not widely marketed, was based on a valuation of £1.5m from LSHGL.
The creditors report from the joint administrators says: “Of the £1.5m sale of the property £1.14m was used to repay previous loans or liabilities to GQS and £110,000 to Cable Property Management as a rent deposit for the lease. £239,000 was remitted to the company upon completion.
"We note that of the £1.14m of GQS indebtedness £200,000 was advanced in December 2022 immediately prior to the completion of the transaction to provide the working capital the business required prior to the transaction. The administrators will investigate this transaction as part of their investigation into the affairs of the company prior to their appointments.”
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The site is now being offered for sale with property advisory firm Knight Frank having been appointed marketing agents.
Tillery Valley Foods is owned £65,046 from Joubere Food Group and £57,779 from a Joubere subsidiary company, Joubere Ltd.
The joint administrators said they will write to both companies requesting repayment of the amounts. However, they add: “We are aware of a potential offsetting balance due to Joubere Ltd (£138,713) which may limit the realisation available.”