Millions owed as Palmer & Harvey collapse is exposed

24-Jan-2018 - Last updated on 24-Jan-2018 at 14:09 GMT

Manufacturers owed millions in Palmer & Harvey collapse

Food manufacturers face losing millions after the failure of Palmer & Harvey, a report from the administrator PricewaterhouseCoopers (PwC) has revealed.

The list of creditors is a who’s who of the manufacturing sector, with companies such as Coca-Cola European Partners (CCEP), Mondelēz UK, Walkers, Ginsters, McCain, Birds Eye, Heinz, Kerry Foods, Arla Foods, Bernard Matthews, Young’s Seafood, Unilever and Mars, to name a few.

The report reveals staggering losses for large international manufacturers. CCEP is owed £17.4M, Walkers Snacks £6.6M, Mondelēz UK £4.2M, Unilever £2M, Arla Foods £2.3M and Red Bull £3.5M.

However, it was not just the large manufacturers caught in the fall-out as smaller regional companies made the creditors’ list as well.

Overall, Palmer & Harvey owed more than £700M to its creditors. Total debts included outstanding monies, as well as goods received and not invoiced.

The results revealed that unsecured trade creditors are owed £453.7M and are thought unlikely to receive any money. Secured creditors are owed £254M and it is thought unlikely they will receive the full amount owed.

The troubled wholesaler to the grocery and convenience store sector went into administration on November 28, with the immediate loss of about 2,500 jobs. According to reports, restructuring talks with private equity firm Carlyle to save the business had failed.

In December 2017, PWC told Food Manufacture it would pledge to help suppliers in the wake of the collapse.

Palmer & Harvey, which was also the nation’s biggest tobacco supplier, delivered goods to 90,000 grocery and convenience stores. Its range included more than 12,000 products including food and both soft and alcoholic drinks.

2 comments

Sympathy? I've none!

Posted by Richard Purdy, 26 January 2018 - 18:06 GMT

P&H difficulties have been in the public domain for years so if suppliers continued to supply without taking measures to be paid then I've little sympathy with them. However, the numbers are staggering. No doubt these losses will be written of against tax. Yet another example of how massive companies can perhaps get away with paying little or no tax. If the government legislated that only the first £million can we written off against tax suppliers would be less likely to offer what seems like unlimited credit.

I run a small wholesale company in Northern Ireland and P&H would have been a competitor. When our confectionery sales started to decline I discovered that P&H were taking that business from us. We are not averse to competition so enquiries were made from our customers as to the price they were paying. We discovered, based on the price we paid, P&H were offering "promotional" prices of cost + 2p-3p per unit which simply isn't economical on a long tern basis and there was no way we could get close to those prices. We would speak to our suppliers and raise this issue with them and see if some more discount could be procured. None was forthcoming as we were informed that if that was the price P&H were selling at then they were entitled to do so. We reckoned that a gross profit was made but a net loss was the result which perhaps has been confirmed with their demise.

We run a tight ship amid fierce competition but when the playing field isn't level because well paid personnel decide on a strategy of cost + a few pennies then hard working small business' run the risk of failing alongside the likes of P&H through little fault of their own. SME's know how to cut their cloth accordingly but even that might not save them.

Perhaps if Directors of companies that go the way of P&H had the threat of jail for gross financial mis-management hanging over their head things might be different. But then again, I just live in cloud cookie land.

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Time for a trade credit revolution.

Posted by Paul Green, 24 January 2018 - 15:21 GMT

P&H: - Yet another example of a company trading at the expense of suppliers, with its directors paying themselves big salaries without any sign of remorse or responsibility when their company goes 'belly up'.

We have to ask ourselves why trade credit even exists.

Who decided that payment on delivery should be abolished?

Producers and distributors are not banks, so why should they 'loan' money to their customers for 30, 60, 90 and, sometimes even 180 day's? It's complete madness.

Why should retailers who run cash businesses be allowed to use their suppliers money to fund their own businesses

Trade credit is the scourge of the business world and a huge blight upon free trade.

If every company paid for its supplies on delivery, then there would equilibrium throughout the business world and the total elimination of cash flow crises.

If companies were forced to borrow funds from their banks to pay for their requirements, then their suppliers could offer them more competitive prices.

SME's would thrive and expand in a POD environment , creating fantastic new employment opportunities..

Time for The Government to act and outlaw all trade credit terms.

The old adage, "A Borrower nor a Lender be" would be an apt message for the start a trade credit revolution.

The UK could lead the World in adopting a brand new method of fair trading that would have companies from all over the world queing to set up business here.

A credit free business world would see no more Palmer Harveys or Carillons and we all say "Amen" to that.