Bernard Matthews deal: potential supplier losses grow to £39M

By Noli Dinkovski contact

- Last updated on GMT

Bernard Matthews: unsecured creditors include £1.38M owed to the government
Bernard Matthews: unsecured creditors include £1.38M owed to the government

Related tags: Bankruptcy, Investment

Bernard Matthews’ unsecured creditors amount to a combined total of £39M – and could increase yet further – in the wake of the pre-pack administration takeover by 2 Sisters boss Ranjit Boparan, according to a Work and Pensions Committee briefing published today (October 10).

The figure – revised up from the £24M declared on the company’s balance sheet – also included £1.38M owed to the government in taxation and social security payments, according to the briefing by Professor Prem Sikka of the University of Essex.

In the briefing, Sikka suggested that there might be other creditors in the form of “intragroup liabilities of £59M, which need to be looked at with a degree of scepticism”​.

Adding that creditors might eventually get 1p in the pound, he claimed that the losses to “unsecured creditors will result in turbulence and job losses in the supply chain and to local traders”​.

Bernard Matthews was sold to Amber Residential Developments Ltd (now known as Bernard Matthews Foods Ltd) and Amber Real Estate Investments Ltd – both part of Boparan Private Office – on September 20.

£46.6M payment to lenders

The sale proceeds of the company will be used to make a full payment of £46.6M to lenders Wells Fargo Capital Finance (UK) and PNC Financial Services UK Ltd, the briefing found.

Bernard Matthews’ former owner, private equity vehicle Rutland Partners, has already received £34M, and is likely to receive a total of £39M.

The briefing discovered that a “pre-packaging insolvency”​ route had been agreed on August 26 2016, but no information was made public about this choice.

It claimed that the secrecy meant that “many creditors continued to transact with the company even though directors had effectively decided to place the company in administration”​.

The briefing concluded that the takeover appeared to have been “carefully crafted” ​to enable secured creditors to extract maximum value from the company – while at the same time dumping the pension scheme and other liabilities.

‘A callous, pre-meditated administration’

Clarke Willis, group chief executive of Anglia Farmers – one of the unsecured creditors – called the deal “acallous, pre-meditated administration to ensure that Rutland received its cash and walked away”​.

Agreeing with the Select Committee’s assessment, he said: “There is a system in place to at least support the pensioners with nothing similar for the unsecured creditors. How much Deloitte were comparable in this, I do not know.”

Willis added: “The amount owed to unsecured creditors will increase. Right now, September invoices are being produced and the value of these was not known on September 20 when the announcement was made.

“Many, like us, will not have submitted our final value.”

Deloitte said its purpose as an administrator was to achieve a “better result”​ for the creditors as a whole than would be obtained through an immediate liquidation of the companies. It added that sale had achieved this.

Rutland Partners said it had invested “significant funds” ​into the Bernard Matthews business over the last three years in a continually challenging market.

No response had been received from Boparan Private Office at the time of publication.

Meanwhile, read why the Bernard Matthews takeover deal came under fire​ from a parliamentary committee.

Related topics: Supply Chain, Meat, poultry & seafood

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