Western Greyhound Ltd was placed into administration on 17th March 2015. The joint administrators, James Tickell and Carl Faulds of Portland Business Support & Advice are now issuing their proposals for consideration by the creditors of the company.
The company began in 1998 as a bus and coach operator in Cornwall and took over the business of a small coach business whose owner was retiring. The company then began expanding; taking over another small coach business and acquiring new routes, before completing its first public timetabled routes in December 1998. Over the next decade the business continued to grow which included the company acquiring its own freehold depot in Summercourt, Cornwall and taking over the Truro park and ride service.
However, in 2012 the company began facing financial difficulties as it lost a number recently awarded tender routes and due to the reductions in concessionary fare reimbursements and fuel rebates. These difficulties continued into 2013 with further reductions in the rebates and the rising costs of fuel. In May 2013, a suspected arson attack led to a serious fire at the bus depot in Summercourt resulting in the loss of 34 buses, approximately one third of the company’s fleet with a value in excess of £1m. Certain services had to be suspended or reduced in frequency and costs were incurred in hiring vehicles from other companies. A further arson attack in January 2014 at the outstation in Liskeard led to another three buses being destroyed. The directors therefore decided to carry out a business restructuring exercise to focus on profitable core routes. In addition to the fires, the company faced other operational challenges including staffing issues and fierce competition from other local bus operators. The company experienced a substantial fall in turnover leading to trading losses.
In late 2014 the DVSA commenced a maintenance investigation following a routine inspection. The management decided to market the company for sale and at the same time consulted a firm of insolvency practitioners for insolvency advice. In mid December 2014, having already secured the sale of its Liskeard operation to a local competitor, the company was sold to a transport consultant and bus company operator. As part of the sale the three directors resigned their positions and took security over the freehold property in respect of their outstanding loans.
Immediately following the sale, the company’s existing bank withdrew its financial support and lending facilities, including the finance on a number of buses which was provided by a company with the bank’s ownership. The director therefore had to seek alternative funding and had to sell a number of buses in order to provide working capital and cash flow in the short term.
In February 2015 the company’s fleet insurance became due. The director approached a broker and two alternative insurers seeking credit to cover the premium; despite a month of correspondence and indications that credit would be provided, on 12th March the company was refused the credit and was therefore not in a position to meet the insurance premium. The director immediately met with Cornwall Council to explore whether it could assist in a plan to preserve the business and the provision of the bus services to the community. No suitable solution could be found and consequently the company ceased trading on 13th March.
The director approached Portland for advice on 16th March and subsequently took the decision to seek the appointment of administrators to protect the company’s assets. The company was formally placed into administration on 17th March 2015.
The administrators have successfully sold the whole of the company’s bus fleet, with the exception of those buses subject to lien’s from creditors. The freehold property is currently being marketed for sale and a number of interested parties have been contacted and offers received. In addition, there are various refunds and debts to be collected which are being pursued.
At this juncture the administrators do not believe that there will be sufficient funds, after settling the claims of the secured and preferential creditors and discharging the costs of administration, to enable a return to the unsecured creditors.
The full joint administrators’ proposals can be viewed here