Liquidation of Western Greyhound concluded with dividend for creditors

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South Coast-based insolvency practice Portland Business Recovery has concluded the liquidation of Western Greyhound Ltd having overcome what it called ‘some unexpected issues’ through the liquidation process.

The Newquay-based operator, which served much of Cornwall, was placed into administration in March 2015 having ceased trading suddenly after a series of problems including a fire at its premises and issues relating to difficulties in obtaining insurance cover. Western Greyhound Ltd had an O-licence for 120 vehicles at its Summercourt head office, 20 at St Austell, two each at Quintrell Downs and Wadebridge, and 40 at Liskeard. The company employed 160 staff.

Portland was appointed as administrator to manage the company’s affairs. Steps were taken to sell the freehold offices and yard together with the bus fleet and other assets. The former employees were made redundant by the company without notice because of the problems which had beset the business. Portland assisted the employees to make claims, which were met from The National Insurance Fund, for arrears of pay, holiday pay, redundancy and payment in lieu of notice.

In February 2016 the administration was converted to Creditors’ Voluntary Liquidation, a process required to enable the funds from the disposal of the company’s assets to be distributed to creditors. Although the sale of the assets was said to be relatively straightforward, the agreement of the claims proved more problematic, resulting in the lengthy liquidation process.

Lengthy negotiations took place with the secured creditor regarding the level of settlement to be paid to them from the sale of the freehold, a substantially reduced settlement eventually being agreed which enhanced the amount of funds then available for preferential and unsecured creditors in the liquidation.

The sudden closure also subsequently gave rise to a significant number of former employees making Employment Tribunal claims as a result of the company not being able to fully consult with them over redundancy. This gave rise to protracted legal action to determine the level of claims with the Employment Tribunal which were eventually agreed at approximately £200k.

Director of Portland Steve Godwin commented: “Although the case has taken longer to complete than we anticipated at the outset the outcome is a positive one in that the secured, preferential and unsecured creditors have all received a return in the liquidation. In addition, the former employees have been compensated for the sudden and unexpected termination of their employment. This is a case where the company had no realistic opportunity to consult with the staff as required by statute and is a classic example of where insolvency legislation and employment law do not always sit comfortably alongside each other.”

Western Greyhound operated in both Cornwall and Devon, initially using a large fleet of Plaxton Beaver-bodied Mercedes-Benz Varios which were gradually being replaced by Optare Solos and Solo SRs at the time of closure. RICHARD SHARMAN