Corby fruit firm Orchard House went bust owing £56 million as its Earlstrees buildings go on the market to claw-back £5m

The enormous scale of debt at a Corby fruit firm has been revealed in documents released by its administrators.

Orchard House Foods Ltd, which had been based in Corby since 1985, was the third biggest employer in the town with some staff having worked there since it opened.

It plunged into administration in January, with 607 Corby employees and hundreds more agency staff made jobless overnight. Employees were forced to apply to the Government’s Insolvency Service for a basic payout.

Now, documents released by administrators Gran Thornton say that the company owed £56.8m, with £1m of that owed to other companies based in Corby – most of them small or medium firms.

They have placed the Orchard House buildings in Manton Road on the market for £4.95 million as administrators try to claw back as much money as possible. Photographs in the online listings show papers still on the desks of employees, hi-vis jackets slung over their chairs and non-perishable stock still piled up in the warehouse.

The fixtures and fittings are also valued at more than £16m, but the accountants say that there is unlikely to be any money left to pay the £7m in wages, pension and redundancy payments owed to 917 Corby and Gateshead employees or £21m to 350 trade creditors.

The documents also reveal that the bank called administrators to oversee spending in July 2022, and they warned of a potential insolvency as far back as August last year.

The scale of debt is astronomical and wide-ranging and demonstrates how the financial conduct of bigger firms can have a knock-on effect on the economy of a whole town.

Corby companies and organisations, including North Northants Council, are owed nearly £1m. Because they are unsecured creditors, it’s vanishingly unlikely they will ever get any of their money back.

Debts owed to Corby firms include: £7,651 to 33 Fab; £8,270 to AGM Chilled; £177,000 to AMB Hygiene; £1,386 to BED electrical distributors; £3,342 to Brunel Signs; £7,157 to CR Services; £54,834 to North Northamptonshire Council in business rates; £148,470 to Grove Electrical Engineering; £37,175 to Interkey Contracting; £2,401 to JP Gardening Services; £10,200 to M&K Food Safety Consulting; £13,338 to Platinum Roofing; £96,032 to RecycleForce; £36,427 to RS Components; £1,951 to Sawford Engineering; £63 to Sky Cabs; £3,516 to Titanium Fire and Security; £315,747 to steel fabricator UE Group; and £8,082 to Universal Training,

Across wider Northamptonshire the firm owed more than £155,000 including £64,644 to Premier Compressor Services in Kettering; £16,693 to Easy2PC in Kettering; £15,700 to Alpha Tanker Services in Kettering; £13,200 to Staffline and £19,267 to Stanair in Kettering.

In total, 350 companies across the world were owed £21m including firms in Italy and the United States. £353,000 was owed to a fruit grower on the Sea of Galilee.

Secured creditors - and first in line for repayment – are Secure Trust Bank, to which Orchard House owed £8.94m. Then private equity firm Elaghmore, which bought Orchard House in 2021, is owed £16.58m. Eight senior managers and shareholders are owed £397,000. All of those debts are secured against the company’s assets and are the most likely to be settled.

Next in line for payment would be the staff members owed £7m in redundancy and wages – the administrators say any distribution to these creditors is ‘uncertain’.

In the administrators’ proposals they say that Orchard House had experienced difficult trading conditions, despite spending millions to try to improve production capacity.

They said: “Whilst the Company successfully agreed price increases and reduced payment terms with several key customers in the latter part of 2022, the company continued to experience significant cashflow problems. Management was in the process of securing additional debt funding from both external and existing lenders for the business when a major customer served notice in November 2022 to terminate its contract.

"This customer accounted for 40 per cent of the Company's historical turnover and therefore the fund raise was no longer viable.”

The administrators were called in to try to sell the company and found a buyer, but trading over Christmas was ‘challenging’ and the buyer pulled out leaving Orchard House with no choice but to go into administration. The administrators’ proposals were rubber-stamped by the High Court at the end of March.

Grant Thornton have now put the freehold for three freehold Corby factories (factories 1, 2 & 5), a warehouse, wastewater treatment plant and office buildings on the market. Being marketed by the Landwood Group, they are asking £4.95m for the six-acre site.

The particulars describe Corby as a ‘key hub for a number of high-profile manufacturing and distribution businesses’.

Helen Jude, Director for Landwood Group, said: “This huge site is in a prominent position on an industrial estate with excellent access and transport links.

“The site offers real potential for a number of different uses, from its current purposes as a high-quality food production facility, to warehouse and distribution or for redevelopment.

“The potential to split the site and reconfigure it are also an important part of why the site is attracting so much attention.”

Orchard House was a major fruit product supplier to huge companies including M&S and Pret a Manger. It also had its own brand – Johnsons Juice. By the time it went into administration, most of the companies who bought its products were looking for alternative suppliers. It had made huge losses two years in a row and was forced to pay most of its own suppliers on a proforma basis.