Over £17.5m collected after high profile logistics group enters administration
Hilton-Baird Collection Services and FRP have collaboratively recovered the position of an invoice finance company after its client, an established haulage and logistics group of companies, entered administration in the aftermath of a significant cyber attack.
While the group was already struggling financially owing to the economic climate and pressures seen across the haulage and logistics sector, it was rocked by a major ransomware attack, which affected key systems, processes and financial information.
The adverse impact this had on the group’s financial position directly led to them entering administration a few months later, and ultimately affected their ability to secure additional investment and funding.
Contingency planning
Hilton-Baird Collection Services were engaged by the invoice finance company soon after the cyber attack to support attempts to reconcile the ledger and provide valuable MI to the lender and the advisors, FRP, to assist an AMA process.
Working closely with FRP, the contingency planning phase also saw our team consider and plan what would happen if the business entered into administration, helping FRP to understand the systems, the people and the data requirements to effect a collect out.
One of the group’s companies was successfully sold to a haulage, distribution and warehousing company. This was a great success, which not only rescued a large number of jobs but also, by providing continuity of service to customers, resulted in a high recovery rate for this otherwise highly contractual ledger.
However, attempts to find suitable buyers for the other entities unfortunately failed, and when the group subsequently entered into administration, Hilton-Baird were engaged to recover the debtor book with the lender’s position exceeding £10 million.
Paperwork and progress
At the point of administration, pallets and goods were scattered across the UK and Europe, along with 22,000 pallets across five warehouses. Hilton-Baird worked with FRP to recover money from customers who had pallets stuck in those various warehouses, depots, lorries and third party locations.
The nature of the business meant that raising invoicing and securing PODs was a very manual process. As part of the contingency planning process, it was recommended to retain the ‘operations support team’ to generate all outstanding pre-appointment and post-appointment invoicing. Hilton-Baird oversaw that activity, as well as the process to repatriate, secure and reconcile all PODs. Knowing this paperwork would be vital during the collections process, it was understood that customers will naturally ask for copy invoices and PODs, which would also be important in the event we needed to use any legal instrument to recover the debts.
Some of the debt was highly contractual in nature, and our knowledge of contractual debt in the haulage and logistics sector in particular – gained through past high-profile instructions – proved incredibly valuable. The task was complicated further by the fact that, for a cohort of debtors, formal contracts were missing or had been agreed verbally. As part of the contingency planning exercise, it was determined that many customers had signed credit applications which referenced Road Haulage Association (RHA) and UK Warehouse Association (UKWA) Terms & Conditions; these were successfully used as a contractual fallback position.
Backed by the wealth of paperwork which had been generated and secured – which was aided by us being engaged so soon after the cyber attack and in plenty of time before the administration event – our collections team was able to make superb progress in the recovery of the sales ledger.
As a result, the lender’s position was cleared in full, and we have now collected more than £17.5 million from more than 750 debtors across the ledgers with significant recoveries made by FRP from other asset classes.
