Orchard House full range

Orchard House supplied M&S with a full range of juice and prepared fruit

Own-label juice supplier Orchard House left creditors more than £56m out of pocket when it collapsed this year, a new report shows.

The prepared fruit and juice producer supplied retailers, on-the-go outlets and foodservice providers across the UK, including M&S, Morrisons, Pret, Sainsbury’s and Tesco.

More than 600 staff at the Corby factories lost their jobs in the administration, which followed an excess of 300 redundancies when the loss-making Gateshead factory closed last year.

A report by administrator Grant Thornton this week revealed the private equity-backed business owed trade suppliers £21.1m, along with another £7m-plus to 917 employees.

Lender Secure Trust Bank is owed £9m and is attempting to recoup loans by collecting almost £3m debts on Orchard House’s books.

PE owner Elaghmore, which acquired the business for £25m from Hain Celestial in a 2015 deal, is also facing a £16.6m shortfall.

The management team, which included former Premier Foods boss Gavin Darby, is set to miss out, while HMRC is not expected to see any of the £3m owed.

Orchard House boosted turnover by 23% to £139.9m in the year to the end of June 2022, but reported a widening trading loss of £7.7m, up from £6.4m in the previous year, the report showed.

The struggles continued throughout 2022 as soaring input costs and labour challenges hit the business.

Orchard House posted a trading loss of £1.8m in the three months to the end of September.

This was despite significant investment by the owners in facilities to improve automation and production capacity. Orchard House also negotiated price increases and reduced payment terms with several key customers in the latter part of 2022 but continued to suffer significant cashflow problems.

Management attempted to secure additional debt funding from external and existing lenders in late 2022. However, an unnamed major customer, which accounted for 40% of revenues, served notice in November to terminate its contract, the report said.

The loss ended its chances of securing new funding and Grant Thornton was hired to run an accelerated sales process.

A suitable offer to save the business was received, but the deal fell through in early January after “a significant deterioration” in trading over Christmas, with the company entering administration soon after.