Tree of Life range

Tree of Life distributed hundreds of brands and more than 15,000 SKUs into retailers and also has its own range of products

Senior figures at Tree of Life owner Health Made Easy have laid the blame for the group’s collapse at the door of its lending bank.

The health food wholesaler experienced a “dramatic” hit to sales caused by the twin shocks of Brexit and Covid, which followed a record year in the 12 months to 31 March 2021 when revenues exceeded £100m.

A recovery plan, included a management restructure, was put in place but group lender HSBC “refused” to step in to reduce the burden weighing on the business, senior sources told The Grocer.

In mid-2021, Health Made Easy asked for HSBC to reschedule loan repayments – which at the time stood at about £2.7m – over a three-year period instead of 15 months. This would have eased pressure on cashflow and given the business breathing room to recover its position and make up for the significant loss of sales, according to the senior figures.

“HSBC refused to do this, which made ongoing trading to meet the bank’s repayment requirements even more difficult.

“HSBC persisted in keeping the existing loan arrangements in place before Brexit and Covid and also forced the company to undertake additional administration costs associated with the loan arrangements amounting to an equivalent annualised level of £1m.

“Although the bank later agreed to a series of deferred payment terms, the fundamental restrictions and difficulties caused impaired recovery.”

As revealed by The Grocer in July, Health Made Easy was locked in talks to refinance this year and also hired corporate finance advisors to find a buyer for the group to secure its future.

However, the search proved unsuccessful, and the group was forced to appoint administrators in August, resulting in almost 200 staff being made redundant.

“This demise could and should have been avoided and this was clearly a time for banking partners to help support a restructuring while Brexit and Covid effects were originally felt,” the senior figures added.

“This was, indeed, the platform outlined by the government with its furlough and CLBILs support scheme, which required banks to act.”

HSBC declined to comment. It said the bank did not comment on individual customers.

Insolvency firm Interpath subsequently secured a rescue deal for Tree of Life sister distributor The Health Store, with Hunt’s Food Group buying the brand and assets last week, alongside a sale of the two brands owned by Health Made Easy, VMS manufacturer Higher Nature and sugar-free chewing gum and mint brand Peppersmith, to CGK Consulting.

It continues to work on a sale of Tree of Life.

Health Made Easy chairman Michael Cole told The Grocer this week that it was “highly disappointing” for the UK’s biggest health food distributor to have succumbed to trading difficulties.

“The impact on its loyal suppliers, customers and particularly its staff is regretted,” he said.

“It is particularly distressing for the loyal staff who have been affected by this and attempts are being made to assist them where possible.”