Revealed: How jailing of Telford boss led to collapse of company

Reports into the administration of SP Holding Group and four of its subsidiaries have been released by administrators, and demonstrate the scale of the debts left by the Telford-based business's collapse.

They also reveal that former owner Stephen Holding, whose prison term led to the company's collapse, is now operating a new company in the Black Country, and has bought some assets from his former businesses.

Restructuring specialist Begbies Traynor's report shows that immediately after Mr Holding was jailed in January this year for encouraging drivers to falsify their mileages, the company's bank withdrew its overdraft facilities.

That piled the pressure on SP Holding's cash flow, because different parts of the company had to make regular payments on loans secured against its assets, and despite a fire sale aimed at raising cash, new director Beverley Fenton put it into administration.

Five companies entered administration – SP Holding Group, SP Holding Ltd, SP Holding Tractor Hire, SP Holding Services, and SP Holding Workshop.

In the report on the tractor hire business, Begbies Traynor said: "The company was experiencing cash flow pressure due to a high fixed cost base in respect of liabilities due under finance agreements on the company's fleet.

"Assets were sold in order to generate revenue in an attempt to reduce the liability base, but it became apparent that the company could not generate sufficient income to meet the finance liabilities and salaries on a monthly basis.

"The company was experiencing increasing creditor pressure and the director formed the view that the company could not meet its liabilities as the fell due without a large injection of funds, which was not possible, and that circumstances were unlikely to change in the immediate future."

The documents also show that unsecured creditors to SP Holding services are owed £258,000, SP Holding Limited owes £228,000, SP Holding Tractor Hire owes £333,000, and unsecured creditors to SP Holding Workshop are owed £87,000.

Secured creditors – namely the company's bank, NatWest – are likely to be paid, and preferential creditors such as staff can expect their back wages and holiday pay.

But while payments could be made to unsecured creditors such as suppliers to the company, they will depend on how much of SP Holding's sales ledger can be realised by administrators.

Even secured creditors of SP Holding Limited are warned to expect "modest" returns.

The documents also show that £2,000 worth of office furniture has been sold to a new company owned by Mr Holding – SP Holding Properties Limited, based in Oldbury – while Shropshire Plant and Haulage, owned by his son Simon Holding, has bought three trailers and a lawnmower from SP Holding Tractor Hire.

Stephen Holding was jailed for eight months at Shrewsbury Crown Court in January after he "aided and abetted" his drivers to falsify records of their hours of work and rest periods.

He had built the Lawley-based business from almost nothing to employ 180 workers at its height.

Since SP Holding's collapse, some workers have started up their own entirely separate business, called Mainstream Distribution.

The administrators report says that a rescue of the company is "not reasonably" practicable, and is now attempting to generate enough money from its assets to pay its creditors, after which the company will be dissolved.

Holding's ex-wife Tracey Smith, 48, of Wellington Road, Horsehay, Telford, also pleaded guilty to offences as the company secretary in charge of paying drivers.

But Judge Barrie accepted she had played a lesser role as she was sentenced to a 12-month community order with 100 hours of unpaid work.