Cumbrian Seafoods lost £11m of business after basa supplied by the company was pulled from shelves last year, The Grocer can reveal.

A letter from Cumbrian’s administrators, PwC, to the company’s creditors, details the full impact of “failed customer audits” of its basa lines last summer on its annualised turnover.

The audits had “subsequently led to the loss of several product lines across the various multiples, putting pressure on the profitability and liquidity of [Cumbrian and its sister company Border Laird] due to the high fixed cost base of operations,” it said.

At the time of the basa incident, Asda - one of the supermarkets supplied by Cumbrian Seafoods - told The Grocer it had withdrawn three pre-packed lines of basa after testing had found “issues with the quality of the fish.” Morrisons said it had withdrawn three lines after being advised to do so by Cumbrian.

PwC’s letter also reveals previously unknown details about events that led to Cumbrian Seafoods’ and sister company Border Laird’s demise and eventual entry into administration on 5 December.

Last October, KPMG contacted more than 35 parties with a view to selling Cumbrian through an accelerated disposal process, but by mid-November, no “acceptable offers” had been received, PwC said in the letter.

When PwC then re-contacted key parties in November to assess their appetite for a sale of the business and its assets, Findus Group was the only party to submit an offer.

Findus Group’s owner, Lion Capital, eventually bought the business and equipment of Cumbrian and Border Laird through Ocean Pure Limited - a Lion Capital subsidiary into which the acquired business was placed - on the same day that Cumbrian and Border Laird went into administration.

According to the PwC letter, Lion paid £1m for the two companies’ business, of which £999,994 was paid for equipment and a nominal amount of £6 for their customer lists, intellectual property, goodwill, information technology, work in progress as well as books and records.

Cumbrian’s trade creditors were owed about £10m and Border Laird’s £1m, PwC said. It added that the sale of the business and assets of the company had maximised the money available to secured creditors but warned that it did not envisage any funds being available for unsecured creditors.

Movers p177

Source

Richard Ford

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