Industry counts cost of DCS’ £160k trade debts

Birmingham distributor Direct Catering Supplies’ recent collapse came at a cost of almost £160,000 to the industry, it has emerged.

The company, which is in the process of being liquidated, owed a sum of £156,958 to trade creditors comprising manufacturers, wholesalers and fabricators.

Debts to the industry accounted for more than 60% of the £252,942 that DCS owed in total. More than £80,000 related to loan accounts in the name of two individuals, with the remainder of the deficit owed to HMRC, Lloyds TSB and employee redundancy pay.

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In all, there were 71 claims from creditors laid out in the Statement of Company’s Affairs presented to those attending a creditors meeting in Birmingham a fortnight ago.

Distributor insolvencies have hit the market hard over the past 18 months and DCS’ demise has once again illustrated the financial implications of a major reseller exiting the market.

Nine suppliers, for instance, were owed sums of money ranging between £5,000 and £17,000 — significant amounts by anybody’s standards.

The biggest single creditor was Coleshill fabricator Springfield Catering Direct, whose claim totalled £17,040. Roller Grills (£15,266) and Classeq (£13,361) were the next most significant creditors.

Chefset and Caterbake were both owed around £9,000, while Birmingham Catering Equipment, Imperial, Rational and RB Distributors each registered claims of between £5,000 and £7,000.

The estimated total assets available for Direct Catering Supplies’ preferential creditors totalled just £18,652, with £12,000 of that figure listed as ‘cash in hand’ and the rest coming from book debts.

Suppliers first became aware that Direct Catering Supplies had run into difficulties at the end of last month when the company’s website went down and visitors to its Smethwick showroom found the premises locked up.

It soon became clear that the company could not continue trading and within a few days a meeting of creditors had been arranged to appoint a liquidator.

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