Private equity owner threatens legal action over shock administration

The parent company of a logistics firm has launched a scathing attack on Close Brothers for putting the business into administration “when it was wholly unnecessary”.

Around 700 jobs were cast into doubt on Friday when it was revealed Birmingham-headquartered The Lloyd Fraser Group, which provides a range of logistics solutions and supply chain management services across its parent company and five subsidiaries, posted a notice of intention to appoint administrators.

The firm’s customers include major players in the milk and fashion industries, and delivers over 50 million garments every year.

But today (25 September), a spokesperson for the company owner Barbican Capital said: “Barbican Capital is contesting the decision to put the Lloyd Fraser group of companies into administration as a consequence of the actions of Close Brothers Limited and Close Invoice Finance Limited.

“Our immediate priority is to ensure that our employees and our customers are impacted as little as possible from Close’s actions. Once we have done so, we will look to Close to seek compensation for the material losses that they have caused to the Lloyd Fraser group for putting it into administration when it was wholly unnecessary.

“Barbican Capital, the owner of the Lloyds Fraser group of companies, is appalled by the actions of Close Brothers Limited and Close Invoice Finance Limited which, we believe, has led to our group of companies being incorrectly placed into administration and unnecessarily losing related licenses required to meet our customers’ needs.

“The actions of Close Brothers has had a major impact on the supply of milk in the UK, as well as the fashion industry – two sectors which Lloyd Fraser Holdings provides vital logistical support to. Without any warning, our employees, their families, and our customers have seen their employers and suppliers, each a viable business, closed quite literally overnight due to the unnecessary and irresponsible actions of Close Brothers, despite the solvency of the companies.

“This goes way beyond the closure of a bank account. This is ‘debanking’ on a terrifying scale which will have an impact on hundreds of employees, the UK’s hard working milk farmers and the nation’s industry.

“These communities have felt the unnecessary consequences of what we consider to be major flaws in Close’s IDEAL client interface portal, which we recently discovered caused huge financial issues for and underfunded our business. On identifying these problems Lloyd Fraser understandably looked to replace Close as our banking partner. This was communicated to Close and an orderly handover was agreed for the end of September. As part of this transition, any monies owed to Close by any Lloyd Fraser company would be discharged in full on or around 29th September 2023.

“However, on 1st September 2023, without warning, and in breach of the agreement to migrate our business away from Close in an orderly manner, Close refused to operate our facility as normal. This has subsequently led to the Lloyd Fraser group companies being put into administration quite literally overnight.

“We believe that these tactics from the bank are tantamount to bullying and are aimed at a group of companies which were on the upward trajectory, creating jobs and meeting our customers’ needs. Close’s actions and the subsequent administration from those actions have left 700 committed Lloyd Fraser employees uncertain as to whether they will have a job next week.

“With the actions of parts of the banking sector already under the spotlight, it is surprising that Close is willing to adopt such oppressive tactics. At a time when confidence in the banking sector is low, it is a major concern that subsidiaries of a London Stock Exchange listed company that is regulated by the Financial Conduct Authority is able to act in such a way.

“Close Brothers’ behaviour now risks a default on a Covid loan from the British Business Bank, which was essential to ensure the continued operation of our business and supply to our customers during the pandemic.

“With all of these factors in mind we have engaged a legal team to fight this administration and seek justice for the actions of Close.”

Founded more than 30 years ago, the group employs around 500 staff which are employed across the UK in 16 locations including Bristol, Chester, Rugby and Holmfirth.

A long-term lease was signed by the logistics firm in July, for a 163,000 sq ft warehouse on Magna Park in Lutterworth.

In its last accounts to February 2022, turnover increased by 20.6% to £43.99m (2021 – £36.4m), with Lloyd Fraser saying this was a result of the fashion logistics division seeing positive recovery after lockdown.

Close Brothers said it would be making no comment.