Collapsed MRS Distribution Leaves debt in excess of Ealm
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dominic.perryfarbi.co.uk COLLAPSED SCOTTISH haulier MRS Distribution, which went into administration in August. leaves a total deficiency that tops the £20m mark, according to documents recently filed at Companies House.
Blair Nirrnno, Gerard Friar and Neil Armour of KPMG were appointed as receivers on 6 August following months of mounting losses at the Bathgate company.
The receivers' report reveals that the recession had severely dented the firm's turnover: it fell 11% to 1282m in the 12 months to 31 March 2010 "from a combination of a loss of certain contracts and a strategic decision by MRS not to compete with rivals at low margin rates".
This led to a pre-tax loss of £0.9m in the period.
Although it had managed to obtain an overdraft extension from its bank, Clydesdale. MRS came under increasing cash-flow pressure, culminating in its fuel supplier cancelling its 21-day credit terms and instead requiring the haulier to pay for supplies in advance.
MRS looked for other suppliers. but given its parlous financial state, was unable to find an alternative.
At the same time, during June and July, the directors attempted to sell the business, but as the report notes: -While a number of parties were willing to take over certain customer contracts, it transpired that no party was willing to purchase the entire MRS business."
Following the appointment of the receivers, a number of contracts and employees were taken over by Bibby Distribution and JBT, a sister firm of MRS.
In addition, its warehouse site in Bathgate was sold for L5.35on to another company run by Donald Carmichael and Ian Wilson, MRS's directors.
According to the estimated statement of affairs produced by MRS's directors, it owes the bank £5.1m although this figure will continue to grow as it accrues interest and unsecured creditors £4.3m. The latter group is unlikely to receive a dividend, the receivers note.