Firms owed money by the turkey producer have been left with an anxious wait, after the pre-pack administration sale was confirmed last month.
A pre-pack administration involves only a company’s assets, rather than both its assets and liabilities, being transferred to a new owner.
Clarke Willis, group chief executive of Anglia Farmers, described the potential fallout as “fairly massive”, adding that he knew of suppliers that were owed “hundreds of thousands of pounds”.
“Businesses [like Bernard Matthews] have got a lot of smaller suppliers that rely on them. There will be a raft of smaller individual businesses doing plumbing, electrics, van repairs and so on – and £10,000 to some of them will be major,” Willis explained.
Bernard Matthews was bought by Boparan Private Office, a private investment vehicle run by the 2 Sisters owner, on September 21.
More than 2,000 jobs
In safeguarding the future of more than 2,000 jobs in production and just over 400 farms across Norfolk, Suffolk and Lincolnshire, the company said it was well-positioned to develop Bernard Matthews into a sustainable, growing business”.
The National Farmers Union (NFU) said it was pleased that such a “key supplier” of British turkey meat would continue to trade in the run-up to Christmas.
However, the farming body also raised concerns that a number of its members would be affected by the deal. “Given that part of the business involves the ongoing rearing of turkeys, we recognise that a quick sale of the business was expedient,” said NFU chief poultry adviser Gary Ford.
“However, we also recognise that as a result of this arrangement a number of suppliers – some of which will be NFU members – will have lost out financially.”
Andrew McTear, partner at insolvency practitioner McTear Williams & Wood, said creditors should assume that they would not receive payments for at least two or three months.
‘Domino effect’
He also warned that those smaller companies, which previously expected to be paid, were at risk of building up debt, creating a “domino effect” along the supply chain.
“They need to assume they are not going to receive any payments in that timeframe and manage their business accordingly,” he advised.
According to McTear, administrators have eight weeks to issue proposals to creditors, but the process was usually faster with pre-pack administrations.
Meanwhile, suggestions that the liabilities of the Bernard Matthews pension fund could fall into the hands of the government’s Pension Protection Fund, have been criticised by Norman Lamb, MP for North Norfolk.
He suggested the move undermined people’s confidence in pension funds as well as the security of the funds they paid into.