Treka Bus and Vehicle Conversion Specialists - Case Update

The joint administrators of Treka Bus, a Brighouse minibus manufacturer, and Vehicle Conversion Specialists, a Bradford-based manufacturer of ambulances and police vehicles, have revealed the reasons behind the administration of the companies and certain other entities within the group.

The companies began experiencing a decline in trading performance in 2020 principally due to the Covid-19 pandemic, which forced extended periods of manufacturing shutdown and disrupted the supply chain for essential parts required for production and to fulfil customer orders. Manufacturing was further impacted by the global shortage of semi-conductors for the vehicle industry.

During 2023, a number of suppliers placed the company on stop or pro forma payment as creditor pressure mounted and cash resources were stretched, impacting the companies’ ability to fulfil orders and meet target revenue levels. In addition, the company experienced delays in product approval documentation being obtained from the Vehicle Certification Agency and customer sign off on vehicles for dispatch, leading to a significant drop in output volumes and pressure on cash resources.

£8.3m in additional funding was obtained from the companies’ lenders, the majority shareholder and certain members of management, but this was not enough for the companies to avoid insolvency. They ultimately entered administration on 20 November. Daniel Smith and Julian Heathcote of Teneo, which had already assisted the companies with an accelerated M&A process, were appointed as joint administrators.

Following their appointment, the joint administrators continued to trade the businesses whilst seeking a sale. Two offers were received – one for the business and assets of all but one of the companies, and one for the business and assets of just Treka. The first offer, which was for £6.2m, was accepted and completed on 5 December. The purchaser is Castilian 1 Limited, Castilian 2 Limited, Promech Engineering Limited (formerly Castilian 4 Limited) and Mellor Bus Limited (formerly Bolin Consultancy Limited). 144 employees of the entity not included in the sale, plus another 15 employees of another entity, were made redundant. There are still a number of parties who remain interested in the entity that was not included in the sale, which owns vacant property valued at £2.4m.

It is currently anticipated that there will not be sufficient funds to pay ordinary preferential claims (employee claims for wages and other arrears) in full. Secondary preferential claims owed to HMRC and unsecured claims are not expected to be paid, and the prescribed part will likely not apply to this case.

The joint administrators have been assisted by Pinsent Masons and Ward Hadaway (legal), Dove Haigh Phillips (property agents) and SIA Group Asset Ingenuity (valuation). Their proposals can be found HERE.