Petty Wood, which handles distribution to independent retailers for brands including Duchy Originals and Sacla', has had its trade credit insurance withdrawn by Atradius.

The move by the UK's second-largest credit insurer means suppliers to the company are no longer protected in the event of default. The move follows a similar withdrawal of cover on the company earlier in the year by Euler Hermes.

The withdrawal is believed to reflect insurers' concern about the distribution sector as a whole following the collapse of Jenks in May. Euler Hermes CEO Fabrice Desnos last week told The Grocer credit actions were most frequent in food and drink wholesale and distribution due to low margins.

An industry source said the withdrawal of trade credit created unnecessary panics. "Some of these ratings actions seem to be based on nothing specific just worries about the sector or even wider economic factors," he said. "The problem is, sometimes suppliers worry it's based on some specific information and get spooked, where in reality there are no specific concerns at all."

Petty Wood said it had not seen any adverse impact as a result of the Atradius action. A spokesman said it was also unaffected by the new partnership between Waitrose and Duchy Originals, and would continue to distribute Duchy products to independents. Management at the company have met both Duchy and Waitrose in recent weeks.