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 The Essex-based greenhouse operator was a key supplier to Aldi and fell into administration in February

Fruit & veg supplier UK Salads owed creditors almost £18m when it collapsed in February, its administrators have revealed.

A report by the Essex-based greenhouse operator’s administrator FRP this week reeled off “a series of issues” that compromised the viability of the business over the past 18 months.

UK Salads first encountered difficulties in December 2022 when its largest client, understood to be Aldi, “rejected a significant number of deliveries”, FRP said.

Other issues listed by the report included a lack of overseas product availability in February 2023, which caused shortages, coupled with between 20%-40% cost increases from other overseas suppliers impacted by unspecified earthquakes, thought to be in Turkey in 2023, which also saw some of its clients go into administration – resulting in a number of bad debts..

The company restructured in July 2023 and 84 members of staff were made redundant, the report confirmed.

“Despite efforts, the company still faced various issues, including another client entering into administration, causing the company’s credit facility brokers to become nervous and ­ultimately decrease/withdraw various credit limits which had a knock-on effect on the company’s cashflow,” it added.

UK Salads fell into administration with a total of 189 creditors, owed £17.7m, with some £7.6m owed to 39 fruit & veg growers and suppliers. One major continental fresh produce supplier was owed over £1m at the time of company’s demise. 

“Unfortunately, many growers and suppliers have lost financially and it would appear they will be unable to recoup any of their losses,” said Lee Stiles, secretary of growers group Lea Valley Growers.

He claimed there was a culture of price undercutting by UK Salads over the past two years as it sought to arrest its losses.

“In some cases at 30% less than the industry standard, this appears to have been driven by the loss of supermarket orders and the need to recoup additional volume in order to maintain the business,” he suggested.

“Anyone within the industry will know that this is an unsustainable business model in the long term and a recipe for disaster, and so it proved,” Stiles added.

Energy suppliers and banks were also owed considerable sums by the supplier, including Genie Gas which was owed £1.8m at the time of collapse and Euro Pool, which was owed £1.3m.

Read more: Growers brace for up to £90m in additional seasonal worker costs

UK Salads had been a long-standing family business before it was bought out by Aquila Food Group in March 2021, FRP’s report revealed.

The new owners largely funded the business via a leveraged buyout model through financial services company Novuna, and secured a government loan and cash injection from an associated company to the tune of £825,000.

It also made use of working capital facilities and most recently refinanced its assets through Close Brothers to free up £600,000 for the business.

Before it faced financial difficulties, UK Salads had increased turnover from £45m to £69m in 2022 and expanded its farmland from 15 acres to 55 acres.

According to the report, the decision to go into administration came after meetings between FRP and Novuna found “a significant funding requirement was needed to maintain business operations”.

Novuna refused to release further funds to support the business. It was owed £2.1m at the time of collapse.

Parent company Aquila Food Group Limited has also gone into administration alongside TWT Logistics, a company owned by the group.

Concerns have also been raised over the past two months regarding where crop destined for UK Salads will end up.

FRP’s report said it was currently “negotiating the proposed sale of the company’s interest in the produce to an interested third party”.

The administrators will “continue to liaise with our solicitors and the interested party in order to complete a sale in due course”.

Aldi was approached for comment.

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