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Management at a failing haulage firm were debating how they could continue to be paid at the same time as they were laying off staff, CM has learned.

Now the firm in question, PJ Butler & Sons, has gone into administration and ceased trading. Fransen Transport, which is owned by the same parent company, Cherrystone Investments, run by Paul Priestley, has also gone into administration but is still trading. This follows the collapse two weeks ago of a third firm, PJ Butler  Storage, with substantial debts.

Managers knew in mid-October that PJ Butler & Sons was experiencing severe financial difficulties and was likely to go into administration. Its current liability is believed to be about £300,000.

Paul Butler, its former owner and director prior to the Cherrystone takeover in November 2005, set up a new company, PJB Transport, in October this year and hopes to operate in the same sector.

But as PJ Butler & Sons laid off drivers its managers were debating how best they could continue to be paid. In an e-mail sent prior to the administration and seen by CM, Paul Butler asked Ian Taft, a former director of Cherrystone Investments and a disqualified director, how best to hide payments to him and other employees from its finance company, Bibby Financial Services.

Butler wrote: "Everyone else here will be made redundant whenever the admin happens, but I don't know what we should do with the wages for yourself, Paul [Priestley]  and M Holland until then.

Scrutinised payments

"I have paid the net amounts of these the last few weeks via Cherrystone because Bibby scrutinises the BACS payments, but probably won't be able to do that any more as [Bibby] won't let us transfer money anywhere at the moment, and it is after the details behind the wages payments."

Butler continued: "What do you think would be best to do? If we want to continue with them on Butler's payroll, it would probably have to be paid via Fransen. If via Cherrystone, the money would have to come in from Fransen."

Butler says he was acting on instructions from Paul Priestley: "He was on a high wage and he didn't like Bibby knowing how much he was getting. That's where he told me to do it from; I don't think he wanted Bibby to know."

Paul Priestley denies any knowledge of the e-mail or its contents.

PJ Butler was acquired by Cherrystone from the Butler family last November last year for a deferred payment of £350,000. Its shareholders were meant to receive the money in quarterly payments over a five-year period, but Butler says he has received just one payment of £17,000.

Part of an empire

He adds: "We were going to be the first part of an empire. The only one that came along was [PJ Butler] Storage and that wasn't similar to us and didn't tie in."

PJ Butler Storage probably contributed to its collapse. It owes about £100,000 to PJ Butler & Sons for truck hire and fuel bills. Vehicles were hired in PJ Butler & Sons' name but they were run by the storage arm. PJ Butler & Sons paid the invoices and then re-invoiced its sister company.

Butler concludes: "The thing that worried me about PJ Butler Storage was that it didn't seem to be doing anything turnover-wise for the cost. We were trying to say that we needed some money back but there didn't seem to be any there."

Paul Priestley says he is not in a position to comment, but as far as he is concerned the allegations are "nonsense". CM tried unsuccessfully to contact Ian Taft.