Collapsed Cheshire haulier F Swain had been struggling since 2008, and without the help of a £750,000 cash boost would have made a £1.45m loss in its final year of trading.
The figures are contained in the statement of administrators' proposals complied by Patrick Lannagan and Dermot Power of insolvency specialist BDO, who were appointed to the firm on 17 May.
According to the report, the losses began in the 12 months to 31 March 2008, where its loss hit £71,000, but by the following year this figure had swelled to a deficit of £295,000.
However, the final straw for the Poynton business was the loss of a major contract with Lafarge Plasterboard in the spring of 2009, as a result of which "the company began to experience severe financial difficulties", the report says.
Although it sold its shares in operator consortium Jigsaw Holdings in August 2009 for £800,000 - which contributed to its profitability in the six months to September last year - and reduced its fleet from 100 to 70 vehicles and instigated a 20% pay cut for all staff, these measures were not enough to stave off further losses.
Its position continued to worsen, and by April this year F Swain was trading in excess of its overdraft limit and could no longer honour the direct debit payments on its financed vehicles.
Faced with the prospect of its fuel account being put on stop on 17 May, the firm had no option but to call in advisers from BDO on 5 May. They attempted to find a buyer for the business, but as the report notes: "The lack of interest can largely be attributed to the quantum of potential TUPE liabilities, the significant losses that had been incurred and the lack of customer contracts."
Following their appointment on 17 May, the administrators made the majority of F Swain's 97 staff members redundant.
In addition, the administrators entered into a licence agreement with Dumfries haulier Currie European whereby it took on the leases of 34 tractors and 50 trailers, plus F Swain's Stoke site in order to ensure continuity of service for the latter's customers.
A separate licence was agreed with F Swain's subsidiary, Sibley Haulage, in order for that to continue to trade: it took over the finance agreements on 20 trucks and 79 trailers. Sibley was purchased in 2008 for £800,000 - the administrators believe they can raise up to £200,000 from its sale.
In all, F Swain owes £2.3m to unsecured creditors, with trade creditors making up £893,095 of that; its total deficiency stands at £2.38m. The administrators say that unsecured creditors are unlikely to see any dividend.
For the full statement see below.
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