Mcerlain’s creditors back deal over debts
CREDITORS of failed bakery firm Mcerlain’s — which went into administration owing at least £4.3m to other companies — have voted to accept a deal that could see them paid as little as 5p in the pound.
The proposal was passed following a fiery meeting between creditors and administrators EY in Toomebridge yesterday.
It took place less than six weeks after the insolvency practitioners managed the pre-pack sale of the Magherafelt company behind Genesis Crafty to Tayto boss Paul Allen’s company Hatch Brothers, for £1.85m.
The sale, which took place on the same day Mcerlain’s entered administration on August 21 2018, saved 260 jobs at the bakery company, but left around 200 unsecured creditors out of pocket with some owed six-figure sums.
The biggest losers include dairy co-op Dale Farm which was owed £641,052.
Other major creditors include Belfast-based Industrial Temps, which is owed £252,579, Lisburn company Andrew Ingredients Ltd, owed £238,353, Co Fermanagh company Ready Egg Products, which has an unpaid bill for £170,040, and Draperstown firm Heron Property, owed a total of £155,372.42.
Some of the creditors on the list were present at a meeting in The Elk complex in Toomebridge. Most opted not to speak publicly, but privately expressed misgivings with the process and concern for the financial blow their businesses have absorbed as a result of the administration and sale.
Described as “heated” by some of the creditors who spoke to Business Telegraph, the as yet undisclosed arrangement for reimbursing businesses was discussed for more than two hours behind closed doors in an upstairs function room.
It’s understood that during a break after the main meeting, a number of creditors briefly huddled to discuss rejecting the proposal.
While a number of creditors did ultimately vote to reject the deal, the resolutions put forward by the administrators were carried.
With companies owed the most money granted a greater say, it’s understood Dale Farm approved the arrangement.
Speaking afterwards, Stephen Boyd of family-owned company Alexander Boyd Displays, which is owed £7,200, described the meeting as tense.
“It was quite heated at times. We don’t know the detail yet of what the settlement could be. But there was talk of 5p to 10p in the pound,” he said.
“It was reluctantly accepted, probably because even if it was rejected, there would probably be more costs involved.”
Although the rate creditors will receive has yet to be finalised, a businessman, who did not wish to be named, said he anticipates as little as 5p-6p in the pound.
He said he was among the creditors who voted to reject the proposal at the meeting. Another creditor said he had also tried to vote down the proposal.
A report seen by this newspaper showed that almost half the proceeds of the sale of Mcerlain’s (£915,000) was paid to Danske Bank, leaving £939,313 which was transferred into the administration bank account.
A spokeswoman for the administrators said: “I can confirm that the resolutions were approved at the creditors meeting this morning.”
Mcerlain’s was founded in Magherafelt 50 years ago by Joe and Roberta Mcerlain. Their six sons had been involved in the running of the firm. But following the administration and sale of the business only Brian Mcerlain remains in the business, in the role of managing director.
Buyer: Tayto boss Paul Allen