A WREXHAM dairy firm which unexpectedly closed down had made losses of about £7 million over the last two years, it has been revealed.

The Leader reported in October how Tomlinsons Dairies, which was started 36 years ago and was one of the UK’s largest dairy companies, went into administration.

Michael Denny and Peter Dickens of PwC (PricewaterhouseCoopers LLP) were appointed as joint administrators of the company on October 14.

A statement of administrator’s proposal, made publicly available via Companies House, sets out the circumstances leading up to the collapse of the dairy firm as well as what has happened since.

In a summary, it states what the firm’s secured creditors are owed; £15.6million to HSBC and £1.8 million to Finance Wales Investments Ltd (FWI).

But going on to describe what administrators think secured creditors could recover, recovery is deemed to be “uncertain” for HSBC and “nil” for FWI.

The Leader:

Tomlinsons Dairies in Minera

In relation to the figures, it explains: “Based on the information currently available we anticipate secured creditors will not be repaid in full.

“Sufficient funds will be available to pay the preferential creditors in full and there will only be a prescribed part dividend to unsecured creditors.”

“Preferential creditors” refers primarily to employee claims for unpaid wages in the four months before the insolvency up to £800, holiday pay and unpaid pension contributions in certain circumstances.

The document states that in the financial years of 2016 and 2017, the company saw profits of £1.6m and £1.9 respectively. But then 2018 brought a loss of £4.3m, followed by a loss of £2.7 the following year.

Describing the events leading to the firm’s closure, it explains: “In 2017, the company tendered for a three year contract to October 2020 which required it to double its size to 200ml (ml meaning 1,000,000 litres, according to the reports glossary of abbreviations) adding processing and storage capacity.

“Having won the contract, the company made very significant trading losses in the ensuing two years.

“Operational and financial management changes were made from spring 2017 to improve the operations of the company.”

According to the document, at the end of August 2019 the company’s management reported draft July trading results which “showed significant deterioration in financial performance.”

It continues: “This put additional strain on the company’s cash flow and, having consulted its legal advisors, the company carried out a detailed review of the deterioration in trading.

“Despite extensive discussions with all key stakeholders, ultimately sufficient support/funding was not forthcoming.

“Further extensive discussions took place with all stakeholders to consider providing sufficient liquidity such that the company could continue trading whilst there was a sale of the business.

“These discussions ended without resolution and the directors were left with no alternative but to immediately plan to cease acceptance of milk deliveries on Saturday, October 12 and to take steps to place the company into administration.”

Following the collapse of the company, administrators have contacted 58 prospective buyers and sent a non-disclosure agreement to 39 parties who expressed an interest in receiving further information.

Regarding staff, the document adds: “The company had 331 employees.

“Unfortunately we were required to make 247 people redundant immediately following our appointment on October 14.

“We have supported these employees where local employers were offering them new opportunities and will continue to provide assistance to those needing to make a claim to the RPS (redundancy payments service).

“Initially we retained 84 employees to assist in the orderly wind-down of the company’s activities, safe closure of the site and sale process, although further redundancies have since been made in stages since our appointment.”

According to the document, as of the beginning of December, there were eight employees who continued to assist the joint administrators.