Boost for creditors as Hewlett debt is cleared

Administrators were called in a year ago after Leeds-headquartered Hewlett encountered financial difficulties, with its annual turnover falling from about £62m in 2009 to about £42m in 2012. BDO said that it suffered as a result of the challenging economic climate.

The firm, which had been trading for more than 25 years, was bought out of administration by its management, saving around 300 jobs.

Hewlett Construction, the new business, bought the assets of Hewlett Civil Engineering, Hewlett Rail and Hewlett Plant Hire for £1.5m from the administrators. This debt has now been cleared, confirmed a spokeswoman for Hewlett Construction.

BDO said that the sum will be used to make a return to creditors. But a spokeswoman said that both secured and unsecured creditors will still suffer “a significant shortfall”.

She said: “The companies remain in administration and work continues to recover monies for creditors.”

The spokeswoman said that it is anticipated that £225,000 will be returned to unsecured creditors of Hewlett Civil Engineering, adding: “Regrettably, we do not expect it will be possible to make any return to unsecured creditors of Hewlett Plant Hire Ltd and Hewlett Rail Ltd.”

Speaking about the setting of the £1.5m debt with BDO, Alan Cooper, managing director of Hewlett Construction, said: “It has been a tough journey to collect old debts on behalf of old company creditors, but we are pleased with the final result.

“It is really positive news for us and for creditors of the old business. We are also currently pursuing further debts, which mean our creditors are due to get more than was originally predicted.

“This repayment marks the end of a very long campaign that started within days of the administration and management buyout. The management buyout allowed us to secure a future for the business, significantly enhancing the prospects for creditors.”

He added that Hewlett Construction has a strong order book and is recruiting staff and buying machinery. He said it has a profitable business model which is being further enhanced by investment in new areas.

A report by BDO filed with Companies House nearly a year ago stated that Hewlett owed creditors an estimated £16m when it went into administration.

The amounts due to non-preferential creditors (generally contractors and suppliers) amounted to £11.6m in total, the report said.

Nigel Waldron, managing director of Yorkshire-based Power Minerals, said that Hewlett went into administration owing his company more than £250,000. He told the Yorkshire Post yesterday that the money has not been paid back.

Power Minerals supplied pulverised fuel ash from Drax Power Station to Hewlett at a road project at Doncaster Carr.

Mr Waldron said: “It is worth noting that we were fortunate to survive this bad debt. A subsequent approach from their new company to open a new account and recommence supply was duly declined.”

Mr Cooper added that the administration was “brought about hastily” by Lloyds TSB, Hewlett’s bank at the time, and not the directors, who were “both sad and disappointed by the event and subsequent effect on creditors and suppliers”.

Lloyds TSB said previously it had worked with Hewlett’s management “to try and find a consensual solution which would put the business on a sounder financial footing”.

But it said it “did not prove possible to restructure without a formal insolvency process”.

Mr Cooper, who headed up Hewlett, is now the sole director of Hewlett Construction. He was part of the team who secured the management buyout, as was John Duffy, former chairman of Hewlett, who is now working for Hewlett Construction as an adviser.

The company said it has retained the majority of its staff base and currently employs nearly 300 people.

Hewlett entered administration due to “huge legacy debts” from its sister property company, said a spokeswoman for Hewlett Construction, who added that a management buyout took place within a few days.

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