Sunday, November 19, 2017

Farmers plunged into debt by Wellgrain saga

May 15, 2017 by  
Filed under Clodhopper

Wheat

Urgent answers are needed by growers owed money, says Clodhopper.

It has finally happened. After two years of mounting concern, grain merchant Wellgrain has at last gone into administration.

Some farmers are owed as much as £100,000 – possibly more. Being based in Cambridgeshire, most Wellgrain customers are in East Anglia but there are some in the Midlands too. Losses will make a big dent in farm balance sheets.

Many of my neighbours – as well as me – have chased money over past months for the payment of grain. That money was paid, albeit increasingly slowly. But then payment times began to get longer and eventually the cheques dried up.

Loyal customers took the usual line of excuses but continued to trade. They now regret that decision. It is a bitter pill to swallow and many have been left wondering how much the company knew about what was coming as they continued to collect grain the day before the announcement.

After months of speculation about Wellgrain’s health, Daniel Smith and Matthew Richards of Grant Thornton were appointed joint administrators of the company on 2 March. They are liaising with the NFU to keep farmers informed about proceedings.

Early estimates have suggested that Wellgrain owes more than £15m to some 300 creditors – including scores of farmers. But those figures could well rise as the administration process unfolds and contracts are unravelled.

As I understand it, the board of directors appointed administrators on a voluntary basis, rather than as a result of any court order. Either way, farmers are out of pocket. And with administrators now appointed, what hope have creditors got of receiving any money?

Going into administration protects a company from its creditors and stops any legal action or process against that company from taking place. This means creditors cannot take legal action against the company to recover any outstanding amounts.

Rescue

The administrators must either rescue the company as a going concern, or failing that achieve a better result for the company’s creditors rather than go into liquidation. Speaking from past experience, the outcome is seldom satisfactory for those owed money.

The directors often seem to retain their private dwellings and other assets and the administrators will be among the first to be paid. Creditors may have to accept less than 10 pence in the pound, which many feel is unacceptable although it is sadly par for the course.

Many farmers are unsecured creditors, so the prospects of a payout are uncertain. Other unsecured creditors number grain traders, local transport companies and other suppliers. The only secured creditors are understood to be the banks.

But it isn’t just farmers and suppliers who have suffered. Local families are suffering too. All but three of Wellgrain’s 31 staff were were made redundant after the administrators were appointed and the company is unlikely to start trading again.

Assets

The extent of Wellgrain’s assets is unclear. And farmers will be towards the back of the queue when it comes to the company settling its debts. This means most could receive nothing. And acheterdufrance.com it remains to be seen what happens to any farmers’ grain in a Wellgrain store.

Even before administration, some farmers were facing a three-month wait for money that should have been paid by Wellgrain within 28 days. Now they face receiving little or nothing at all – at a time of year when cash flows are already under pressure.

Administrators are required to reveal their proposals for the company within two months of being appointed. For any farmers caught up in this sorry saga, answers can’t come soon enough.

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!

 
barbour pas cher barbour pas cher barbour pas cher barbour pas cher barbour pas cher golden goose saldi golden goose saldi golden goose saldi golden goose saldi golden goose saldi doudoune moncler pas cher doudoune moncler pas cher doudoune moncler pas cher doudoune moncler pas cher doudoune moncler pas cher moncler outlet online moncler outlet online moncler outlet online moncler outlet online moncler outlet online