2,500 jobs lost as wholesaler to High Street shops goes bust

BRITAIN’S biggest delivery wholesaler for High Street stores went bust last night – putting more than 2,500 staff out of work.

Palmer & Harvey, which supplies more than 90,000 outlets from corner shops to Tesco, and employs some 3,400 people, collapsed into administration.

It left thousands out of work just weeks before Christmas and put at risk small businesses that were owed money by the firm, which was founded in 1925.

The collapse followed months of talks to find buyers, with cigarette businesses Imperial Brands and Japan Tobacco International keeping the company afloat with loans and credit agreements.

Imperial Brands said the collapse would leave it nursing a £160m cost.

Some 2,500 staff were told they had lost their jobs yesterday afternoon and were told to go home and wait for further news. Many drivers out on the road found out from colleagues.

A further 900 could also lose their jobs, with accounting giant PwC brought in to handle the fallout.

Matthew Callaghan, a joint administrator at PwC, said: ‘The company has insufficient cash to continue to trade and the directors have concluded there is no longer any reasonable prospect of a sale. This is a devastating blow for everyone who has been involved in the business. Our priority is to ensure that all employees made redundant are assisted in processing their claims.’

Tight margins in the industry have made conditions tough and the business has struggled to make money for years.

It made a loss of £17.3m on sales of £4.4bn in the year to April 2016, according to its most recently filed accounts.

One source pointed the finger at Japan Tobacco International, saying its bosses suddenly refused to offer further help – effectively torpedoing rescue efforts.

However, a JTI spokesman said that it has ‘worked continuously to facilitate a constructive solution to Palmer & Harvey’s challenges, including extending significant financial and operational support to allow it to continue its operations’.

Palmer & Harvey has been plagued by concerns about Tesco’s plans to buy wholesaler Booker. The supermarket accounts for 40pc of Palmer & Harvey’s sales.

Last night Tesco and Costcutter were forced to switch suppliers to ensure deliveries at shops.