Operator also owes over £5m to unsecured creditors, of which only around 5% is likely to be paid
A Public Inquiry (PI) into GHA Coaches has seen the licence revoked and disqualification orders made for the directors, Gareth Lloyd Davies and Arwyn Lloyd Davies, by Traffic Commissioner (TC) for Wales, Nick Jones.
The exact timescales of the orders has not been revealed yet, as the TC is still determining the period, or whether the timescale should be indefinite. A detailed written decision from the TC is in the works.
> Financial collapse
The extent of GHA’s financial crisis was revealed in a report from administrators Grant Thornton.
In total, unsecured creditors are owed £5.276m from the company. However, once secured creditors and the administrator’s estimated costs of £414,641 have been paid, only £241,860 is expected to remain, just 4.6% of the funds needed and a shortfall of £5.035m.
In a report, the administrators said: “The current outcome statement, before costs, indicates unsecured creditors will receive a dividend of the order of 5p in the pound.”
Banks, as secured creditors, will receive a larger proportion of the money they are owed, are still likely to face a shortfall.
Some of the largest debts include HMRC (owed £0.98m), Meridian Driver Ltd (approx. £88k), Prema Energy (£69k), International Tyres Ltd (approx. £44k), GreenRoad Technologies (approx. £32k) and Thomas Hardie Commercials (approx. £30.9k).
The report also described how the company’s collapse came about.
Having already extended its funding with HSBC in 2013, 14 and 15, the bank and Grant Thornton were asked in March 2016 to look at providing support, as GHA had suffered from trading losses, the end of rebates for fuel, and the repayment of financing against its vehicles.
By April a restructuring programme had already seen GHA reduced in size. It had also asked HMRC to defer some of its debts, but it refused and instead imposed a winding-up petition which led HSBC to freeze the company’s bank account in early July.
When GHA’s council customers denied it £1.5m of funding which it had requested, the company was plunged into administration.
The operator’s collapse resulted in the loss of 320 jobs and a total of 11 routes were left without service.
> Public Inquiry
The packed PI was held into the licences of GHA Coaches Ltd on September 20, 2016 at Welshpool Town Hall. It considered two O-licences authorising the use of 146 vehicles in Wales (with bases in Ruthin, Corwen, Ruabon and Wrexham) and 80 vehicles in the North West of England (Chester, Middlewich, Winsford and Macclesfield).
The TC considered bus monitoring exercises carried out by Bus Users Cymru and DVSA, along with a DVSA report on maintenance standards.
County Times reported on the PI proceedings, where it was found that the company had failed to adhere to maintenance standards in order to keep vehicles on the road.
Nick Jones said that evidence from a transport manager had indicated that ‘buses had been kept running to bring income in and that maintenance of vehicles did not adhere to the terms of the licence.’
When asked if that was an accurate assessment, Director and Transport Manager Gareth Lloyd Davies said it was, ‘but only in the last three months.’
Mark Williams, a vehicle examiner from the DVSA in Wrexham, gave evidence that said the fleet engineer responsible for hundreds of buses was away on driving duties during one visit, while many vehicles were off the road.
The TC said: “It is not surprising there are problems with maintenance if senior management are off driving. It appears it’s all hands to the pump in terms of driving and getting the vehicles out.
“I’m surprised to hear of a fleet engineer driving on a daily basis. It is a symptom of the operation, a merry-go-round of vehicles moved from one depot to another, with no-one having overall control of vehicles being safe.”
Gareth Lloyd Davies said: “I should have taken more control. We paid people to do it and they didn’t do it.”
Nick Jones said: “The buck stops with you. You should have been keeping control of it.”
The PI also heard that on January 12, 2016, a wheel came off a coach carrying children from the Alun School in Mold on a main road. The vehicle had not received a Periodic Maintenance Inspection (PMI) for more than three months.
Mr Jones said: “This appals me. It had the potential to kill people on the road, schoolchildren and innocent road users. 14 weeks, six days since the last inspection and surprise, surprise, the wheel falls off. The word shambolic comes across as the way the licences have been run generally.
“There is a clear pattern here of poor maintenance, not having records and the PMI being exceeded on a regular basis. It doesn’t say much for the safety of people travelling on GHA Coaches. Finances came before road safety.”
The directors agreed and admitted they should have done more, though they did say that they were not in a position to provide more evidence to challenge the findings at the PI, as they claimed much of their documentation was with administrators Grant Thornton.
Mr Jones said: “It comes across that the failure of this company is due to a complete lack of control. Other operators in Wales comply with the rules. People know it costs them money but they are expected to keep their vehicles in tip-top condition.
“Not only did you jeopardise road safety, there were competitive disadvantages for the other operators in North Wales.”
The company’s then transport managers, Darrell Barron, Berwyn Davies and David Yarwood, were admonished with a warning.
Both brothers are set to be personally disqualified and will lose their O-licences.
The TC said: “I will produce a written decision which will include findings that the operator has lost its repute.
“It is apparent to me road safety has very much taken second place to financial considerations and this has been the case for a period of time. It is conceded by you that this happened for at least a three-month period, but in my view probably much longer. Any operation that puts finances above road safety should not be operating in the future.
“You are both directors of an entity which ran illegally. It indicates that as you were a company about to go under, desperate measures were taken to avoid administration and road safety became very much bottom of the pile in consideration.
“You should have closed the company earlier. I am going to make orders of personal disqualification against both of you.
“I have concerns about either of you being involved in running vehicles, and both should be kept out of operating licences for period of time.
“I will reflect on how long that should be – the failures come down to your negligence and putting your financial interests above road safety.”
Transport for a Stereophonics concert in Wrexham was also organised illegally by the company, as it did not have permission from the TC to run the service.
Referring to this, Nick Jones told the Davies brothers: “It indicates that as you were a company about to go under, desperate measures were taken to avoid administration.”
Another PI into RJ’s of Wem and RML 2418 is set to take place after the written decision of the TC is released. The operators, which the Davies brothers are currently involved in, are understood to have taken over or bid for some former GHA contracts.
> CPT comments
CPT Cymru welcomed the strong action taken by Nick Jones against GHA Coaches. The company was not a CPT member.
John Pockett, Director of CPT Cymru, said: “This company’s actions were appalling, and, as the TC commented in the PI, finance was often put above safety.
“Operators who do not ensure that safety is absolutely paramount have no place running services in Wales, or indeed anywhere else. CPT welcomes the firm action of the TC and supports him fully.
“I’m pleased to remind our members that CPT offers a comprehensive range of support services to our members to enable them to meet compliance demands.”
