‘Lombard blocking rescue’ says Lancashire Tea founder

THE founder of Lancashire Tea says a rescue of the business is being thwarted by the the Government-owned Royal Bank of Scotland’s commercial leasing arm Lombard.

Paul Needham, who set up the business with Lynn Hitchen in 2006, claims Lombard is refusing to accept a final £20,000 pay-off on a £123,000 production line having found a buyer for the equipment.

Newton-le-Willows-based Lancashire Tea went into administration on November 11 but a private investor has agreed to back a buyout which would preserve some 40 jobs.

The business, which has a £700,000 turnover, was originally backed by the Merseyside Special Investment Fund and was using RBS’s factoring service until it was withdrawn in February. While Lancashire Tea searched for new finance it missed several payments on the production line which led to Lombard seeking repossession.

Mr Needham is now seeking to block the move with a court injunction.

“The investor has made a call to Lombard saying we will give you every penny and they said, ‘no, we want the machinery’ because they have found it’s worth more,” said Mr Needham. “Instead of bank robbers we’ve got robber banks.”

Mr Needham said the production line was essential to achieving the buyout. He said Lombard has claimed the equipment is not protected by the administration order because it began negotiations with Lancashire Tea before November 11.

“If this is the way RBS and Lombard operate they should have been closed down,” added Mr Needham. “The Government should have given the £32bn to industry.”

RBS, which has recently stressed its support for small business, could not be reached for comment.