News

The bosses of a Teesside container haulier have defended their actions after putting the business into pre-pack administration and starting up again under a new guise. Bulmers Logistics went into administration at 4pm on 21 January as debts and cash-flow issues threatened to overwhelm the company. However, five minutes later its trade and assets were sold in a pre-arranged deal to Bulmers Transport, a firm run by the same directors, for an undisclosed sum.

The directors say the deal, which  allows the new company to start with a clean slate, has saved more than 200 jobs. Business development director Andrew Spence-Wolrich adds: "The alternative was to let the business go into administration and wait for a buyer. You lose all your customers and within days there's nothing left to save."

Bulmers had already shed about 50 staff before Christmas to cope with a slump in container traffic. However, this cost-cutting was not enough to protect it from a perfect storm of financial pressures. The firm had expanded rapidly in recent years and consequently was highly geared and many of its trucks were in the first year of five-year leases. As the downturn hit, many of these were left standing idle as work disappeared.

"Expansion was logical at the time," says Spence-Wolrich "but in the light of the market, one didn't fit the other."

To add to this, Bulmers Logistics' backer - believed to be Clydesdale Bank - declined to fund it going forward.

Spence-Wolrich  adds: "When you believe you have insufficient working capital, the directors have to make a decision about what's in the best interest of the creditors."

He acknowledges that the firm's creditors will have lost money and if they receive any dividend from administrator Deloitte it will be several months away at the least. Despite this, Spence-Wolrich says that most of Bulmers Logistics' subcontractors have moved to the new business. "There is always a risk doing something like this. But it cannot, and will not, fail," he says.