As FoodManufacture.co.uk revealed on Monday, the Newcastle firm entered administration last Friday when Grant Thornton assumed control, and the administrators are now seeking to sell it as a going concern.
The company's Benton Lane site in the city once made Findus products such as Crispy Pancakes under license and employed around 150 staff, most of whom have now been made redundant.
One North East provided the firm with the multi-million pound grant to help it recover from a serious January 2009 fire at Benton Lane, and North Tyneside MP Mary Glindon was quoted in the local press yesterday as saying: "There are questions here that need to be answered, like what will happen to the £2.5m invested by One North East."
GMB regional secretary Tom Brennan also reportedly said: "A lot of public money was ploughed into the company, so we want to know where that money has gone."
Where did the money go?
Addressing concerns as to how the grant award was spent, One North East deputy chief executive Ian Williams said: “One North East awarded Longbenton Foods £2.49m [in 2009] via the Grant for Business Investment Scheme. However the vast majority of finance for the project was provided through private funding sources."
Stressing that the Benton Lane site was "hugely important", where it generated around £4.5m a year for the local economy, Williams said: “This was a project that had a great deal of local and political support and could have brought hundreds of jobs to North Tyneside. While it was deemed to have risks the potential benefits outweighed the threat of failure.
“The agency will log its claim with the receivers to seek clawback of the funding and we will continue to work closely with them to secure a future for the Longbenton facility."
State of the art facility
Williams added: “This was a burnt-out shell of a building [when the fire struck]. It is now a modern facility equipped with state of the art food production equipment and will be highly attractive to potential buyers. Hopefully the site can be sold to ensure these food production jobs remain on North Tyneside.”
He also expressed sympathy for factory staff: “The news is a major blow for the workforce of Longbenton Foods, who have been through a lot in a short space of time. It is extremely disappointing that the company has been forced into administration, after it was unable to raise the private sector finance to resolve a number of cashflow issues it has encountered.
“We are seeking urgent discussions with the receivers. One North East will also work with our public sector partners to do all we can to support those affected by this distressing news.”