Ice cream company owes £3m to creditors
COLLAPSED Carmarthenshirebased ice cream business Frank’s Ice Cream owes almost £3m to its creditors.
A report from joint administrators, Richard Lewis and Alistair Wardell of professional advisory firm Grant Thornton, shows that unsecured creditors, which total more than 80, are not expected to receive any of their money back.
Secured creditors in Barclays Bank and the Development Bank of Wales are jointly owed £1.38m. Barclays is expected to recoup in full its £787,000 of lending.
The Development Bank of Wales is owed £601,000, having provided the firm with two loans which had fixed charges against assets.
One loan helped finance a 4,300sq ft purpose-built gelateria and innovation centre built next door to its existing manufacturing site in Capel Hendre, which opened at the start of 2022.
The administrators said there is “likely to be a shortfall” in what the Welsh Government-owned investment bank is likely to receive.
There are no figures yet on what preferential creditors could be owed.
The administrators said secondary preferential creditors could include HMRC, but they have yet to receive any claim.
Unsecured creditors are collectively owed nearly £1.6m.
They include Pembrokeshire milk supplier Totally Milk, which is owed more than £124,000.
Construction firm Malpross Services, based in Cross Hands and which built Frank’s Ice Cream facility, is owed just over £106,000, while Swansea City is owed more than £4,000.
Other unsecured creditors include Cardiff Bay-headquartered Atradius (£55,000), Caerphilly DS Smith Packaging (£34,000), Kerry Ingredients (£14,000), and Swalec (£97,000).
In a proposal report to creditors, the joint administrators said: “The anticipated quantum of any distribution to secured creditors is currently uncertain.
“We will be in a better position to comment on future distributions when negotiations with parties interested in acquiring the business have been completed.
“The return to the unsecured creditors is estimated at nil pence in the pound.”
The family-run business, which dates back to the 1920s, ran a factory and ice cream parlour in Ammanford.
It entered administration in March but had been loss making for some time, having been “severely impacted” by rising costs.
Grant Thornton said: “The manufacturing business had been loss making for some time having been severely impacted by the surge in energy costs over the last 12 months and also a significant increase in raw material costs.
“This, combined with an investment in the ice cream parlour put working capital under pressure and left the company unable to fulfil orders.”
Since entering administration, the parlour has reopened and continues to trade with 20 staff, while administrators seek to find a buyer.
The administrators said: “It is the intention of the joint administrators to sell the parlour as a going concern.
“If this occurs those employees will be transferred resulting in them not having preferential claims.”
However, if it cannot be sold as a going concern the assets of the business will be disposed of in the interests of secured creditors.
Property advisory firm Lambert Smith Hampton has put a book value of £1.85m on land and building assets.