The Buffalo Farm - Case Update

Chad Griffin and Callum Carmichael of FRP Advisory, the joint administrators of The Buffalo Farm, have revealed the reasons behind the farm’s collapse and details of the pre-pack sale to co-owner Steven Mitchell.

The Fife-based farm was launched in December 2004. The company attempted to diversify in 2018 by opening a cafe and then again in 2020 as it invested significant sums into transitioning into a buffalo dairy with an emphasis on the production of buffalo mozzarella. This diversification was intended to offer the farm more opportunity to scale but proved challenging, including because poor herd performance significantly impacted milk yields available to the dairy.

These challenges were exacerbated after the pandemic ended and the “buy local” trend died with it. Customers transitioned back to the traditional supermarket model, and forecasts indicated a significant cash injection would be required to keep the company alive. At the time when the company was introduced to FRP by its accountants, it had not secured funding but was still trading in a limited fashion, generating sales from its shop and cafe. The company was still also speaking with several potential investors and assessing various cost cutting measures and opportunities for expansion.

Unfortunately, improvements in trading performance were eroded by farm and production issues, which limited attempts to expand into different markets. In addition, a TB outbreak restricted the movement and processing of meat. Talks with investors broke down in late 2023 and HMRC served a statutory demand on the company.

An AMA process was conducted, resulting in a pre-pack sale to co-owner and director Steven Mitchell shortly after the joint administrators’ appointment on 11 March. Under the deal, Mr Mitchell, through an entity, purchased a majority of the company’s assets for £70,000. All 59 of the company’s employees were also transferred to the purchaser.

Secured creditor Allica Bank’s mortgage is expected to be novated to the purchaser. At this time, it is anticipated that secondary preferential creditors will receive a partial dividend, while unsecured creditors including investors are not expected to receive a distribution.

The administrators have been assisted by Anderson Strathern (legal) and Thainstone Specialist Auctions (agents). Their proposals can be found HERE.