Automotive sector’s shutdown caused haulier to crash into administration
Haulage business Amco Services (International) crashed into administration earlier this month as a result of the automotive sector slamming its brakes on when lockdown began.
The Worcester-based business had been struggling and had lost £1m in the financial year. But its management was hopeful it could trade its way through its cash problems.
However when lockdown began, the £25m-turnover business forecast it would miss out on £5.7m of expected revenue between March and July, new documents have revealed.
75% of the haulage and warehouse business’s customers were in the automotive sector, which has also seen the pandemic magnify existing difficulties.
Advisers from Grant Thornton sought interest in the company but the only bid came from CBW Resources, a company created by three Amco directors.
The deal was completed through a pre-pack that saved all 156 jobs.
Chief executive Paul Andrews, managing director Don Mucci and David Careless paid £143,000 for the business and have also invested personal funds to support trading and satisfied new funders to provide working capital.
Andrews said: “Essentially, the business has been restructured and refinanced to give both customers and suppliers confidence and peace of mind that Amco are still the right partner for the future, especially as we begin to emerge from lockdown and flex to meet the needs of business today in the new norm.
“We have retained all of the staff and we are going forward with the same management team supported by the existing dedicated planners and administration team, warehouse operatives and frontline drivers.”
Although the failed business has creditors of £3.14m, it had a debtor ledger totalling £3.43m.
Administrators Eddie Williams and Jon Roden said “the quantum and timing” of payments to creditors will be driven by the level of debt collections.
Amco Services operated from a head office in Worcester and three warehouse and logistics sites in Redditch and Telford.
Its warehousing division accounting for 20% of its turnover but was loss-making. Its large warehouse in Redditch was underutilised and it was facing a dilapidations claim of up to £500,000 from its planned exit of the site.
The impact of Covid-19 “materially altered” its ability to deal with its liabilities.
Although the company identified ways of freeing up £3.9m in cash, most of that would have needed to be repaid within 12 months.
Despite the furlough scheme, and negotiated rent and lease payment holidays, it became clear the business “would be unable to trade out of the current position”. This ultimately led administrators to agree a pre-pack deal that offers a return to creditors and saved the jobs of the workforce.