Jobs were lost prior to Sunderland-based snack bar producer Fullwell Mill being sold out of administration following difficulties brought on by the pandemic and Brexit.
The £2m turnover business, which runs a factory at Southwick Industrial Estate, had recently shed 10 jobs from its once 30-strong workforce as it saw demand for its products fall. Fullwell had supplied train station and airport operators in the UK and EU that saw a severe downturn in footfall during the pandemic.
Despite the lifting of restrictions, those customers had not seen a return to pre-pandemic sales levels. On top of that, the firm had experienced supply issues as global shortages of key ingredients stopped in some cases and caused significant price rises elsewhere, sometimes as much as 100% in the last six months.
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Fullwell's fixed price contracts meant it was unable to continue trading despite a strong underlying order book. Buyers EE Wholesale Ltd - which shares director Peter Fawcett with Fullwell Mill Ltd - stepped in following a marketing exercise by administrators at Begbies Traynor.
The business and its assets were sold to EE Wholesale, the UK subsidiary of US-based fair trade workers co-operative Equal Exchange, Inc for £150,000 leaving £779,906 owed to a range of creditors including supplies in the UK and abroad. Administrators have set out a report which indicates both secured and unsecured creditors will receive dividends.
Now, the new owners are reported to be introducing four tea production lines into the factory. Equal Exchange specialises in importing a range of food products from chocolate to honey using a fair trade model.
In a report filed at Companies House, Begbies Traynor said: "The production of certain fruit bars had significantly reduced which had left the company overstaffed and redundancies were therefore made in the middle of June 2022. On July 5, 2022 the updated cashflow forecast suggested that, although the trade creditors were being paid as they fell due, including the major creditors, continued trading would have resulted in the company running out of cash by the end of September 2022.
"The company assessed its options and considered a company voluntary arrangement (CVA), however this was discounted as trading at the current levels would not be profitable and customers would be reluctant to deal with a company in CVA. Liquidation was also considered however this would have resulted in the immediate cessation of trading, with the loss of goodwill. In addition, the value of the tangible assets would significantly decrease, and the cessation of trading would increase the value of creditors and potentially impact on the recoverability of the book debts.
"The cashflow forecast produced did not support long term ongoing trading by either the company or the proposed administrators. The costs associated with this would outweigh any benefits. The same applies to any sale as a going concern as creditor levels were too high to allow ongoing trading to return the company to solvency.
"As the company had a long-established trading history with a loyal customer base, and in order to safeguard
the value of the goodwill and the book debts realisations, a pre-pack administration was considered the most
appropriate procedure to maximise the value of the business and assets for the benefit of the creditors."
Fullwell Mill started in 1990 as a bakery business before going on to produce speciality flapjacks and museli bars. In 1993 it claimed to have produced the UK's first ever energy bar and by the late 2000s was suppling major supermarkets such as Tesco and Sainsbury.
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