Meatless Farm owed creditors more than £2m when it collapsed last month, according to a report into the administration, which also revealed how much vegan rival VFC paid to rescue the brand.
More than 150 unsecured creditors are owed £1.9m by the UK arm of Meatless Farm, while employees are owed in excess of £100k and banking partner HSBC is owed £230k.
Meat processor Hilton Food Group is one of the biggest trade creditors, with £125k outstanding, and Nottingham contract manufacturer Giorgio’s Continental is owed more than £430k.
A report into the collapse by administrator Kroll said the bank, employees and HMRC (which is owed an unconfirmed amount) were all expected to be repaid in full from the collection of Meatless’ book debts of about £1.8m.
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Unsecured creditors are also forecast to see an unspecified repayment further down the line.
There were intercompany balances of £5.8m due to the UK business from the four group North American and European subsidiaries, with Kroll still reviewing how to recover the loans.
The administrator’s report also highlighted that VFC – backed by co-founder Matthew Glover’s Veg Capital – paid £475k to rescue the brand from administration, including £200k for the IP, £175k for stock and £100k for plant and equipment.
A bridge loan of £2m was secured by Meatless Farm
However, the report doesn’t detail how much shareholders and investors in the group have lost, but The Grocer – as reported in a recent analysis into the failure – understands the figure stands at north of £90m.
“The company and wider group had received several tranches of funding from its investors to develop and commercialise its products and brand,” Kroll wrote in the documents.
“However, the business had not reached a position where it was capable of consistently generating profitability and cash, and was heavily reliant upon ongoing capital investment.
“The company had also encountered a number of challenges in recent years, which had an adverse impact on its trading performance and cashflow. These issues stemmed from legacy overheads, supplier terms and other costs within the business, which the company was intending to resolved through a cost reduction programme.
“Ongoing losses meant that a further round of funding was required in the early part of 2023 and the company received an offer from a potential investor with whom they entered into discussions. However, following protracted negotiations, the investor withdrew their interest and the directors began to explore the other options available.”
The Grocer understands Meatless secured a £2m bridge loan earlier this year to continue trading while it awaited a significant injection of capital from the potential investor, believed to be South Korea’s SK Inc, the company’s biggest backer. Meatless founder Morten Toft Bech said in May the withdrawal of a “big investor” had “caught the board and the management team of MF by surprise because our cash runway was timed to this anticipated incoming investment”.
Kroll were engaged by Meatless directors on 22 May – as revealed by The Grocer – to run an accelerated sales process, but no buyers were interested in a solvent deal, according to the report.
The insolvency firm then sent out a distressed teaser – which revealed revenues had gone backwards in 2022 and combined losses in the past three years were close to £50m – to 241 interested parties with a 31 May deadline, with the company close to running out of cash to keep paying staff.
Meatless Farm could no longer continue to trade
Kroll received interest from 18 potential buyers, with two making offers.
By the 9 June, the Meatless directors concluded they could no longer continue to trade and made all 50 staff in Leeds redundant.
Kroll were then appointed as administrator on 13 June and continued talks with the two interested buyers, accepting VFC’s offer on 20 June.
Meatless’ four North American and European subsidiaries, including the Dutch parent company that held all the UK shares, were not part of the Kroll administration process.
According to reports in the Dutch press, the Netherlands side of the group is going through its own bankruptcy proceedings.
The status of the North American operations and Calgary-based Lovingly Made Ingredients subsidiary remains unclear, but the business appears to still be trading. Despite the website being offline, the Lovingly Made Ingredients business is active on LinkedIn, posting yesterday to celebrate 4 July.
“Happy 4th Of July to all of our US partners, customers and friends from the team here at Lovingly Made Ingredients,” the post said.
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