Greenshires Group - Case Update

Nathan Jones and John Lowe, the joint administrators of Leicestershire print and packaging company Greenshires Group, have revealed that the firm nearly avoided administration, but a deal with directors for the business and assets of the firm on a going concern basis ultimately could not be completed.

Despite returning a small net profit in the six-months leading up to 31 October 2023, the company’s cash position became unmanageable due to suppliers tightening credit terms, the company self-financing a new rigid box division which was anticipated to improve profitability over the medium term but caused issues in the short term, high debt financing costs and legacy debt catch up from historic losses.

The company considered options to raise finance and arranged a long term Time to Pay agreement with HMRC to ease cashflow. The directors sought advice from FRP in January 2024 after an initial introduction from Rowleys. FRP then conducted an accelerated marketing process, contacting 447 parties, 26 of whom signed NDAs. Unfortunately, issues related to the amount of capital required to satisfy legacy debts and a long-term lease agreement tied to the company discouraged potential purchasers.

Ultimately, directors Marcus Cross and Richard Dalby made an offer for the business and assets on a going concern basis via a pre-back administration. Support in principle was received from funders and the offer was accepted and progressed with the sale agreements being drawn up. The offer was deemed acceptable by the pre-pack pool and agents Gordon Brothers, who were instructed to value the chattel assets. The deal fell apart at the final hour when terms could not be agreed between funders and the purchaser. The company was placed into administration on 23 February, resulting in all 56 employees being made redundant.

It is currently anticipated that secondary preferential creditors may receive a dividend, but unsecured creditors are unlikely to receive anything.

The joint administrators have been assisted by Shakespeare Martineau (legal) and Gordon Brothers (agents/valuers). Their proposals can be found HERE.