Memorandum submitted by Jonathan Williams
I was given your details by Chris Kelly last
week and I understand that you have taken a keen interest in pre-pack
administrations. I wanted to give you details of a recent case
which may be of help. I have previously written to Mr Fitzpatrick
and to Lord Mandelson about pre-pack and received a very inadequate
response from both.
For your information, I am the owner and Managing
Director of Maritime Transport Ltd., the largest private container
transport company in the UK, based at Felixstowe in Suffolk.
The facts of the case were as follows: At the
end of January a company called Bulmers Logistics went into pre-pack
administration and re-emerged the following day, with the same
management team, trading as Bulmers Transport.
Whilst no one wishes to see the demise of any
transport organisation, there are always fundamental, underlying
reasons and regrettably employees, suppliers, funders and HMRC
can lose out in the process. In Bulmer's case, this was a company
we and many others in the transport industry had been predicting
would fail for a very long time. The current recession was not
the reason this company failed, it was simply the final straw
that broke the camel's back.
Pre-pack administration has prevented other
transport operators benefiting from Bulmers' demise, to help them
in difficult market conditions, but most concerning, it has propped
up a failed business and actually placed it in a more advantageous
position to compete against other operators, which is not what
pre-packaged administration is designed to do.
I find it incredible that the directors have
been allowed to set up overnight and recommence trading as if
nothing had happened at all. Given these circumstances, how is
it that a failed business and management team is able to effectively
continue to operate without first a rigorous assessment of its
viability and assurances that the same management team will not
leave a further trail of liabilities in its wake?
Whilst I have a great deal of sympathy for the
employees in such situations and share the desire to protect against
job losses as much as possible, especially in the current climate,
in my experience if the work genuinely exists at sustainable rate
levels, other companies will always fill the void created and
the workforce will naturally migrate to new service providers.
But what about the survival of suppliers and their employees affected
by the pre-pack? These companies are conveniently forgotten and
left to hang out to dry. When an insolvent company is wound up,
at least creditors have some chance of being paid and their workforce
holding on to their jobs.
In a case like Bulmers, pre-pack sends out absolutely
the wrong message. It makes a mockery of professionally run companies
who work exceptionally hard to create sustainable businesses only
to find they are competing with organisations that can potentially
behave recklessly, walk away from their obligations to creditors
and make a comeback with no obvious restrictions or changes in
management. This is a practice that should only be available to
companies that pass the most stringent viability tests, otherwise
we're opening the floodgates for all to jump on this bandwagon.
I have no axe to grind with Bulmer Logistics
and my company would not have directly benefited from their demise.
However, I know I'm not alone in reaching the conclusion that
for the owner to state in his press release that he is leading
a management buyout and to purchase his business for £1,
leaving behind £10m debts, is an offence to any company trying
to succeed in these very difficult times and pre-pack has enabled
him to do it.
14 April 2009
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