The latest company to go into administration is Waverley, the largest drinks distributor in the UK, which has collapsed with 830 jobs in the balance. The company blamed the large numbers of pubs closing down on its demise. The firm was sold by Heineken in 2010 for £19.2m and taken over in a management buy-in. Waverley posted a pre-tax profit of £4.2m last year despite a 12% drop in turnover. The company supplies drinks to pubs, restaurants, and attractions such as Madame Tussaud’s.
The administrators at Deloitte are hoping to sell the company and are looking for buyers. In a statement Daniel Butters, joint administrator, said Waverley was a victim of “tough” trading conditions as well as a tightening of credit terms.
Last years accounts revealed that the company was reliant on invoice discounting for its working capital. So did the factor put it into administration? The factor is a secured lender and has the power to do this as the charge holder. Read our page on fixed and floating charges to understand this better.
Credit Agricole also had lent the business millions of pounds so it is not certain what precipitated the fall.
In the end too much debt and not enough margin is problem that many larger businesses are facing whilst smaller businesses are not getting access to finance at all.