A key supplier of medicines across the UK fell into administration owing more than £57m after attempts to sell it fell apart.
Testerworld, part of the £300m turnover Converse Pharma Group and operating under the DE Group brand, collapsed along with stablemates Eclipse Generics Limited and Doncaster Pharmaceuticals in May leaving 1,000 people redundant.
Administrators have confirmed the North East-based business, which operated sites across the country supplying some 4,000 pharmacies, suffered irreparable damage after sector regulator the MHRA temporarily suspended its licence for a breach.
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A report filed at Companies House by administrators at Kroll said the suspension of Testerworld and Eclipse's licences meant the group had temporarily ceased trading - a period it could not recover from.
The report said: "Although the group secured the ongoing support of its secured creditors at that time, following discussions with the MHRA the licences were subsequently reinstated subject to certain restrictions and a requirement for the group to improve certain aspects of its IT systems and stock tracking capabilities.
"The period of suspension and subsequent restrictions resulted in a significant and ongoing reduction in revenue (c25%) which the group found difficult to replace and ultimately had a material impact on the group's profitability and cash flow.
"Despite further funding from the secured creditors at that time, the group identified a further funding need over and above the existing facilities of £2.5m to support ongoing trade. The group's lenders at that time were unable to extend the facilities beyond the current limits and without the additional support identified the group looked at alternative options.
"The group engaged a firm of financial advisors who undertook an extensive marketing exercise in late 2021 but, whilst an appropriate party was identified, for reasons outside of the Group's control it was not possible to complete a sale.
"However, during the process a debt solution was identified which during late 2021 saw a combination of the secured lenders facilities refinance the group's existing facilities and provide the additional funding identified by the group."
Administrators went on to say that despite the refinancing, trading was poor and further funding was needed to shore up the business. Despite expressions of interest, no buyer was identified for a substantial part of the business though some of the nine depots across the UK could be sold individually.
All but a handful of the group's 1,000 staff, retained to support a wind down of the business, lost their jobs. Employees were among those left out of pocket with £2.1m in unsecured amounts owed, while £451,911 in pay arrears treated as preferential creditor claims is likely to be paid by government.
Meanwhile more than £43m was owed to other creditors including substantial amounts to distributors and lenders.
Administrators noted Testerworld's debtor book was worth £32.68m at the time of appointment, assigned to invoice financing provider Secure Trust Bank plc which was owed £17.8m under the agreement. At the time of publishing the report, about £18.2m of the debts had been realised.
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