Distributor blames building contractors for liquidation

A West Midlands catering equipment distributor that went into liquidation last month with debts of £368,000 has blamed increasingly unreasonable demands from building contractors for its demise.

CPS Catering Equipment, which traded from the Electra Park industrial estate in Birmingham, closed its doors on January 24. Liquidation proceedings are currently underway following a creditors’ meeting earlier this month.

CPS was an established distributor in the industry which had operated over many years and ran its own fabrication business. It employed 10 members of staff, although at its peak the company had 16 people working for it.

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However, recently it began to find it difficult to cope with the pressures imposed on it by main contractors that it was doing large amounts of project work for.

A source linked to the business and with knowledge of the situation said: “After many successful years trading predominantly with the education catering sector, we found ourselves dictated to by external forces beyond our control. With the demise of Local Authority catering departments, more of our work was being done through building contractors who took extended periods to pay, kept retentions beyond specified agreed periods and refused to sign for items as received until they had handed over the whole facility.”

The source said the “final contributing factor” in the decision to close was the declaration by its largest building contractor that it expected to buy the capital equipment for projects at the prices CPS was paying its suppliers.

While the situation will reignite the debate over the extent to which terms enforced on kitchen houses by building contractors are prohibitive to business, CPS Catering Equipment’s liquidation has come at a big cost to the catering equipment supply chain.

The company closed with total debts of £368,379 and assets of less than £25,000 for preferred creditors.

HM Revenue & Customs was the single largest creditor with debts owed to it of nearly £40,000, but the majority of outstanding payments — some £288,931 — was owed to suppliers of catering equipment and other products and services.

The Statement of Company’s Affairs published at the meeting of creditors showed that almost 90 suppliers were owed money from CPS.

The single largest trade creditor was Manitowoc, which is owed £31,975. Other suppliers hit hardest by the liquidation include Middleby (owed £21,888) Foster Refrigerator (£18,082), Lincat (£17,905), Interlevin (£16, 607) and stainless steel supplier Outokump Distribution (£16,566).

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