liquidator folklore, hree reasons companies cial collapse: gement and tors
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of the failed Barnfather Ltd had the ress their feelings to its t at a meeting in The company collapsed ond national operator at to crash in as many ee Group, massive ind; many to other it had been one of in a large slice of ss for Coca-Cola & ges (C-C&SB) when a at Wakefield in 1989.
d that the low profit a contributing factor s demise.
as set up in 1971 and bers of subcontractors siness with companies I, as well as for soft ike Barncloughs, and er Ltd had more than railers of its own, with leased depots around eeds, London, and as based. pending for recovery of £1,700 from another operator which has defaulted. Paul McCormack says in less than 10 weeks last summer his Durham-based company earned £3,000 for the use of a tractive unit pulling a Barnfather Ltd trailer. He does not expect to be paid.
HARDEST HIT
Mike Horwood senior runs a family business of five vehicles, Mike Horwoods Transport, based in Maidenhead, Kent. His company is one of the hardest hit. "The creditors list says we are owed £17,000 but it's closer to £22,000," he says.
"Because we were working for Barnfather Ltd on a contract as big as Barracloughs we thought this money would not be a problem. It shows you how wrong you can be," he says.
On 12 October AAH Holdings bought £500,000 worth of vehicles, trailers, goodwill and contracts from the beleaguered Barnfather Ltd. AAH continues with an estimated £9m worth of business under the title Barnfather Distribution Services. The sale had the approval of the bank and AAH has no liability for the debts of Barnfather Ltd.
"Anybody can sell off the good bits and leave the rest behind," says Malcolm Bright, managing director of the Keighley-based haulier of the same name. He is owed £2,300 for return loads from Edmonton in north London and Tilbury in Essex.
Soon after the sale to AAH the remaining part of Barnfather Ltd accept the switch. This, combined with an over-valuation of the Barnfather Ltd fleet, is thought to be behind the halving of the original price agreed subject to a due diligence report.
The liquidator may well decide that, as it is the duty of the directors to get the best deal for the creditors, to sell at that price and at that time was indeed the most appropriate action. There were positive benefits to some employees, for example.
"There were a number of business contracts and there was always the possibility that some would come with us and some would not. We were able to offer jobs to those people working on the contracts which did," says Tony Black, managing director of AAH Distribution Services.
Few hauliers caught by the fall will be consoled. Many are concerned that of an estimated £400,000 owed to subcontractors, £300,000 is alleged to have been incurred in the last four or five weeks before the deal to sell AAH was completed.
As the proceeds from the sale were always likely to go to the bank, there was little likelihood that any of the hauliers which worked for Barnfather Ltd during that period would ever be paid. The liquidator's investigation will examine whether this could be seen as wrongful trading.
The liquidator will also be investigating if there is more to the relationship between Barnfather Ltd and Barnfather Freight (the Felixstowe clearing operation which changed its name last month to Network Freight), other than a common name and common director. David Parkinson was a director of both but it is not unusual for a director to be on the board of two companies which trade with each other.