Creditors paid six years after bus firm went bust

DRIVERS and other creditors owed cash when Cornish bus company Western Greyhound Ltd went bust have finally been paid – more than six years later.

The Newquay-based firm ceased trading and went into administration in early 2015, with liquidators appointed a year later.

But South Coast-based insolvency practice Portland Business Recovery found “unexpected issues” when it took over proceedings.

These included a wrangle with a secured creditor over how much it would be paid and claims by former employees, mostly drivers, owed cash.

Portland Business Recovery has therefore only just been able to conclude the liquidation of Western Greyhound Ltd.

The consultancy said that although the sale of Western Greyhound’s assets was relatively straightforward, sorting out the claims proved more problematic.

Lengthy negotiations took place with the secured creditor regarding the level of settlement to be paid from the sale of the freehold of the firm’s Summercourt depot.

Portland successfully agreed to a “substantially reduced settlement”, which meant there was more money available for other preferential and unsecured creditors.

The sudden closure of the bus company in 2015 also gave rise to a significant number of former employees making employment tribunal claims as a result of the company not being able to fully consult with them over redundancy.

This led to protracted legal action to determine the level of claims, which were eventually agreed at about £200,000.

Steve Godwin, director of Portland, said: “Although the case has taken longer to complete than we anticipated at the outset the outcome is a positive one in that the secured, preferential and unsecured creditors have all received a return in the liquidation.

“In addition, the former employees have been compensated for the sudden and unexpected termination of their employment.

“This is a case where the company had no realistic opportunity to consult with the staff as required by statute and is a classic example of where insolvency legislation and employment law do not always sit comfortably alongside each other.”

Western Greyhound was set up in 1998 to take over the three vehicles and the contracts of Cornishman Coaches, whose owner was retiring.

It became one of the main public service bus companies in Cornwall, serving much of the duchy and employing more than 150 people and owning more than 60 buses.

But staff found the business had closed without warning when they turned up for work one day in March 2015. Bosses cited financial problems and difficulties in obtaining insurance cover for driving the company out of business.

Two years earlier, a fire had destroyed 35 buses – a third of the firm’s fleet and worth £1m – and a further three buses were destroyed in a second fire in 2014.

In February 2016, the administration was converted to Creditors’ Voluntary Liquidation (CVL) with Portland being appointed as joint liquidators. Western Greyhound’s bus services were taken over by First Devon and Cornwall, Plymouth Citybus and Stagecoach South West.