Farmdrop suppliers, lenders, staff and shareholders are set to lose out on millions of pounds as a result of the online grocer’s dramatic Christmas collapse, with the company racking up losses of more than £50m in its 10-year history, according to a new report lifting the lid on the administration.
Creditors of the company were owed £21.2m at the time of Farmdrop’s failure on 17 December 2021, with 450 trade suppliers out of pocket by £2.6m, the report by administrator RMT Accountants and Business Advisors revealed.
Dozens of grocery brands, including the likes of Oatly, Manilife, Cawston Press, East London Liquor Company and Lily’s Kitchen, were among the list of unsecured creditors, as well as hundreds of independent farmers and suppliers.
Preferential creditors, which includes unpaid wages and holiday pay of £300k and a HMRC tax claim of £514k, should see a return. But secured creditors Bootstrap Europe and investment group Wheatsheaf will have to wait to see how much of the £10.3m owed will come back.
There is also £7.3m of unsecured debt, almost £600k more to HMRC and unsecured employee claims of £437k.
RMT said, after taking into account the anticipated costs for a managed wind-down of the business, it did not expect unsecured creditors to receive any money back.
Shareholders will not see any return on the £36m invested in the business, including hundreds of crowd backers at Crowdcube, who invested in the company back in 2014. The substantial investment, raised over a number of rounds, was used to build the infrastructure of the business, market the brand and win customers.
As revealed by The Grocer last year, Farmdrop ceased trading on 16 December, leaving thousands of customers without their Christmas orders. Suppliers, who delivered stock worth thousands of pounds for the Christmas rush, were also left struggling to retrieve products from shuttered Farmdrop warehouses.
The company – formed in 2012 by former City broker Ben Pugh – had a long history of growing losses as ballooning costs raced ahead faster than rapidly expanding sales.
The new report from RMT, which was appointed administrator on 17 December, revealed losses continued to escalate up until its failure.
Revenues, which had more than doubled to £12m in the 2019/20 financial year thanks to Covid-driven demand for online food shopping, soared 52% to £18m in the 12 months ended 30 June 2021, according to unaudited figures.
However, losses also ramped up from £10m in the prior year to £12.8m as a result of the huge costs involved in running the business, which employed about 200 staff. It also made a loss of £4.7m on sales of £5.3m in the six months from 1 July to its collapse.
It takes Farmdrop’s total losses in the past six-and-a-half years to £52.3m, with losses made from 2012 to its first full set of audited accounts filed at Companies House in 2016 not recorded.