Catering Insight’s newsdesk was dominated by two stories last month, namely that of the full extent of Crosbys debts being publicly revealed, and the news that Francis Catering Equipment is being investigated for pensions irregularities, both by the firm’s administrators and now by West Midlands Police too.
With both insolvent companies’ assets subsequently being bought by Unitech Industries, it is worth taking a moment to compare their situations. The numbers coming out of the Crosbys administrators report are depressingly huge, with the total topping £1.8m and the most unfortunate creditor being Lincat, owed almost £125,000.
The Francis numbers from last year are very similar, with debts also totalling £1.8m. But in that case the top creditor was HMRC, owed over £362,000. While the overall trade creditor total was a little less than Crosbys, the single largest industry creditor figure was larger, at more than £131,000, sadly for Proline.
The fact that the numbers are so large shows that many in the industry had no idea that either dealer was facing financial problems. With reports of both trading right up to the last second before their insolvencies, it’s no wonder that suppliers were caught unawares.
Crosbys administrator’s proposal report fully detailed the events leading up to administration too, showing that following a full reconciliation of the distributor’s stock during February 2018, the actual stock versus book value was considered overstated by approximately £289,000. So the company was aware of problems developing at least by that point, but the administration wasn’t confirmed until 20 March.
Therefore, for around a month it was still trading while knowing there were serious issues in the background. While I’m sure that there can be lean trading times at any firm, the ‘don’t tell anyone and hope it gets better’ strategy runs the risk of exactly the above happening – a serious business failure and ill-feeling all round. More transparent communication would therefore seem the wisest choice.
The same could be said for the latest development in the Francis saga, the pensions irregularities. The administrator, FRP Advisory, is working to establish the value of an apparent pension deficit, which could see former employees issue claims for outstanding amounts. And with West Midlands Police now investigating a potential fraud allegation, the situation is very serious indeed.
While ex-Francis MD Neil Francis told Catering Insight that he is aware of the situation and that it should be in the process of being resolved, it sounds as if at the very least the line of communication between him and his staff was not clear enough.
We understand that employees which were transferred over to the new entity, Francis Commercial Kitchen Services, only found out about the discrepancies when they tried to login to their new pension schemes.
With the administrator and the law investigating what exactly went on, it’s only a matter of time before the full picture is revealed. The truth, as they say, will out.