A report from Essex-based FRP, the administrators of failed supplier UK Salads Limited (UKSL) has revealed that the company owed its creditors almost £18 million when it failed, and that a series of repeated rejections was in part responsible for its cashflow problems.
In December 2022, UKSL largest customer (which The Grocer has suggested was Aldi) rejected a substantial number of deliveries, leading to an investigation. This was compounded in February 2023 by a decrease in turnover due to the lack of availability of overseas products, resulting in shortages and increased costs.
Additionally, suppliers were affected by natural disasters, including the Turkish earthquakes, while a number of customers became insolvent, resulting in monies owed to UKSL. In an attempt to mitigate these challenges, the company underwent a restructuring in July 2023, resulting in 84 staff redundancies. Despite these efforts, the company faced continued issues, including another client entering administration, which further strained the company’s cashflow.
UK Salads Limited was formed as a family business in June 2004 and was acquired by Aquila Food Group Holding Company Limited on 26 March 2021. In February 2024, UKSL requested an increase in its facility limit with financial services company Novuna to meet critical payments, but when no additional funding was secured, the decision was taken to place the company into administration.
UK Salads Limited owes nearly £18 million to a total of 189 creditors, with approximately £7.6 million owed to 39 fruit and vegetable growers and suppliers. Other suppliers owed money include Genie Gas (owed £1.8 million), Euro Pool (£1.3 million) and Novuna finance (more than £2 million).
“Unfortunately, many growers and suppliers have lost financially and it would appear they will be unable to recoup any of their losses,” commented Lee Stiles, secretary of Lea Valley Gowers Association. He added that prior to insolvency, UK Salads had repeatedly undercut prices in a failed attempt to arrest its losses. “In some cases [this was] at 30% less than the UK industry standard,” he continued. “This appears to have been driven by the loss of supermarket orders and the need to recoup additional business in order to maintain the business. Anyone within the industry will know that this is an unsustainable business model in the long term and a recipe for disaster, and so it proved.”
Parent company Aquila Food Group Limited and associated company TWT Logistics have also gone into administration.