Shellfish supplier Big Prawn owed creditors more than £23m when it filed for administration, according to new documents outlining the failure.
The majority of the money owed isn’t expected to be repaid, the report by administrator Kroll revealed.
Big Prawn appointed the restructuring specialist as administrator in January 2023 after battling numerous headwinds in recent years, including Brexit, Covid and inflationary challenges.
Family operated peer Sykes Seafood saved more than 120 jobs thanks to a pre-pack deal struck earlier this year to rescue the business.
Kroll’s report revealed Sykes paid £1m in the deal, with an option to also buy the Big Prawn production facility for £2m at any point this year. Sykes is currently paying for the licence to occupy the premises.
Big Prawn had been struggling with “unprecedented” import and distribution cost increases in the aftermath of Brexit and its foodservice operation took a big hit throughout the pandemic.
It lost a key contract to supply Morrisons in 2021 and struggled to negotiate cost price increases with other customers throughout 2022 to offset soaring energy and other input costs.
Kroll also highlighted customers revised or cancelled sales orders as demand reduced for shellfish during the cost-of-living crisis, with consumers turning to cheaper sources of protein.
Big Prawn first engaged Kroll in April 2022 to advise the business on options, including exploring investment options to raise new equity or sell the business. However, no offers were received on a solvent basis given the challenges facing the group.
HSBC is facing an estimated £6m shortfall in the £12m owed by Big Prawn, including a £2m Covid recovery loan. The bank is attempting to collect £3.9m on the debt ledger to pay for the £2.9m invoice finance facility, with £750k collected when the report was signed off at the end of February.
Big Prawn chairman and majority shareholder Sean O’Hanlon is not expected to see a repayment on loans of £5.7m arising from an MBO in 2018, while unsecured creditors were owed £5.4m.
Established in 1995, Big Prawn supplied shellfish to retailers, wholesalers and the foodservice industry.
The company fell to a pre-tax loss of £380k in the year ended 31 May 2021 despite turnover nudging up 4.9% to £34.8m, according to the most recent accounts available at Companies House. It had struggled with the loss of foodservice sales through the pandemic, estimating a £2.5m hit to profits in 2020/21.
Kroll said the company increased sales to £37m in the 2021/22 financial year, but didn’t give profit figures in the report.
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