Taxpayer left to pick up £10m bill after delivery group’s collapse

Taxpayers have been left with a £10.5m bill after one of Britain’s biggest delivery companies collapsed.

Sheffield headquartered Tuffnells called in administrators – Rick Harrison and Howard Smith of Interpath Advisory – last month as it struggled with rising costs that it was unable to pass on to its customers.

Most of the company’s 2,200-strong workforce were made redundant.

In a recently filed document, details have emerged about the company’s debts as the administrators work to realise the company’s key assets for the benefit of its creditors.

The company’s first ranking secured creditor is Leumi, which, since 2020, has provided the company’s working capital facilities.

Leumi’s indebtedness totalled £7.6m and Interpath said it is anticipated that Leumi will receive a return from the administration “but the amount remains subject to the level of asset realisations achievable”.

Barclays Bank also holds a fixed charge over a company bank account. It is understood that Barclays was owed £1.6m on appointment but are holding a £2m cash deposit in respect of direct debit cover and are therefore unlikely to suffer a shortfall.

Tuffnells’ secondary preferential creditor – HMRC – is owed approximately £10.5m in respect of outstanding VAT and Pay As You Earn liabilities. Administrators said that, based on current information, it does not anticipate a return to the secondary preferential creditor. The report added that while a TTP was ultimately agreed with HMRC in May 2023, the underlying trading performance of the business continued to underperform forecasts.

Unsecured creditors are estimated to total £12.3m while ordinary preferential creditor claims will total approximately £620,322.

With 33 depots across the UK, Tuffnells returned to private ownership in 2020 when it was acquired by Palm Bidco Limited.

Since then, it suffered from a number of pressures which hit trading, including the impact of COVID-19, high cost inflation and an increasingly competitive market.

In the lead up to the administration, the company faced a difficult period of trading, reporting losses in 2018 and 2019 respectively.

In the last filed statutory accounts for year ending 31 December 2021, the company reported turnover of £178m, with an operating profit of £6.5mand a pre-tax profit of £5.5m.

In the management accounts for the five-month period ending 31 May 2023, turnover was £64.7m with an operating loss of £4.4m.

Since administrators were appointed, various deals have been sealed with companies such as Shift buying Tuffnells’ brand and intellectual property assets and nine depots, while logistics and delivery services provider DX reached an agreement to take over over 15 UK sites.