Leeds-based distributor, YCE Catering Equipment, was forced to close its doors this year after accruing around £2.1m in debt, according to the statement of administrator’s proposal now publicly available from Companies House.
Julian Pitts and Richard Kenworthy of Begbies Traynor were appointed as joint administrators of the business on 28 August after YCE was hit by financial difficulties caused largely by the impact of the coronavirus pandemic on the hospitality industry.
The document states that £610k of the debt was to trade creditors, with the most money owed to major brands including Leigh Tec Systems, ML Stainless Fabrications, Hobart UK Warewash, The AFE Group, Valentine Equipment, Inox Fabrications and Foster Refrigerator.
The proposal detailed: “The company principally traded in the hospitality sector which had grown strongly following the end of the financial crisis of 2007-2012. However, there was a marked reduction in capital expenditure in the dining sector during 2019.
“Revenue from all the company’s major key chain account customers who operate within the hospitality sector (Marstons, MAB, Star Pubs & Bars and Stonegate) reduced significantly. These customers made up of over 85% of the company’s revenue streams and it sought to diversify its customer base outside of hospitality into the health, education and care sectors.”
The report details that the company sought to cut its overheads including cutting director salaries and reducing staff numbers, as well as obtaining loans. The document added: “However, with the onset of the Covid-19 pandemic, the hospitality sector further contracted. In the 4-month period between April 2020 and July 2020 the company had turnover of £364k compared to the same period in 2019 of £2.0m and £2.6m in 2018. This represented a drop in revenue of 82%.
“Working capital diminished to a critical point and the company sought funding support from all and any of the government-outlined routes. The majority of the company’s employees were furloughed. Time to pay arrangements were negotiated with many of the suppliers and a time to pay arrangement was also sought with HMRC.
“It became evident that there would be little expenditure in the hospitality sector during the remainder of 2020 and work in the education sector was limited to being carried out during school holiday periods and subject to budget constraints. The company therefore had insufficient income to continue to trade.”
YCE did also instruct Eddisons Commercial to market the business for sale at that point, identifying a number of potential buyers, but ultimately none of whom wanted to take on the company’s liabilities. However, Eddisons was able to secure a sale of intellectual property (including trading names, telephone numbers and websites) and business equipment, together with one commercial vehicle to an unconnected party. The sale was for a total consideration of £50k + VAT.
The company was incorporated in 1986 and provided kitchen design, installation and maintenance services nationwide. Directors at the time of administration were Lyndon Moorby, who joined the firm in 1991 and was appointed to the board in 2007, and Nick Brassett, who was recruited in 2013 as head of business development. In 2017 he was appointed a director and in April 2019 he bought out the then MD, Richard Isherwood, who retired.