UK prepared fruit and juices supplier Orchard House Foods has called in the administrators, it has revealed.
The company, based in Corby in the English Midlands, emailed workers with the news yesterday (10 January). Some 600 employees will be impacted by the move.
The union representing the company’s workers described the move as a “betrayal”.
The news comes just days after Orchard House Foods, which supplies major supermarkets and foodservice businesses, halted production at two of its five Corby plants, blaming supply issues. There have also been complaints from workers made redundant after the company closed a factory in the north-east of England in December that they had yet to receive their payouts.
In a statement sent to Just Food yesterday, a spokesperson for Orchard House said: “Today, we have announced the start of a legal process to appoint an administrator. We have had to take this action given the extremely challenging economic and trading conditions that have badly hit Orchard House Foods.
“The economic conditions have meant increased input prices and overheads, and this has significantly increased pressure on our cash position. As a result, the directors have taken the difficult decision to file with the courts a notice of intention to appoint an administrator.”
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On what the move means for its current and former staff, the spokesperson said: “For our colleagues at our site in Corby, once appointed, the administrator will step in to run the business, repay our creditors and review strategic options for the business.
“For our former employees at Gateshead, once an administrator is appointed, they will be able to claim any outstanding monies owed, including the delayed redundancy payments, via [the Government’s] Insolvency Service. We expect this to happen as soon as the administrator has been appointed and we will be providing them with additional support to help with their claims.”
On Monday (9 January), Just Food revealed Orchard House Foods closed two of its facilities temporarily at the weekend, A company spokesperson said that was due to “a supply issue” and that he understood this issue had been resolved.
At the same time, Just Food was contacted by a former employee at the axed Gateshead site who said redundant workers had still not received payouts and the company has not told affected staff when their money will arrive.
The more than 250 full-time workers at the Gateshead facility had originally hoped to receive their redundancy pay before Christmas. However, they were told in an email before the festive period that the firm could not pay them until January as various factors were having a “significant financial impact on the business”.
Orchard House Foods had announced in August plans to close the factory in Gateshead and switch production to Corby where its headquarters and other facilities are located.
The former employee who contacted Just Food over the delayed redundancy payments said on Monday: “People are on the breadline now, waiting for their money. This has left employees desolate, with no money for two months.”
Orchard House Foods said in December that it was working with its banks and shareholders to secure additional funding but “regrettably this is taking longer than anticipated”.
The company, which supplies prepared fruit, fruit juices, smoothies and fruit yogurts to customers including Marks & Spencer, Sainsbury’s, Tesco and Pret A Manger, was sold by US food group Hain Celestial to UK private-equity firm Elaghmore in early 2021. Just Food asked Elaghmore on Monday for its response to its portfolio company’s current issues.
Commenting on the situation affecting former workers at the axed Gateshead facility, Mark McHugh, a regional officer at the Bakers Food & Allied Workers Union, which represents workers at Orchard House Foods, described the company's action as a "shameful act of betrayal" which "betrays the loyalty of the workers who have been left without money for weeks".
He added: "The net result is that nearly 300 full time workers and 180 agency workers at Gateshead, many of whom have been with the company for a number of years, have not only lost their jobs but have not been given the money they are owed and were left with nothing whatsoever over the Christmas period.
"It will now be left to taxpayers to pay out statutory redundancy,"
In its latest financial results, for the year to 30 June 2021, Orchard House Foods saw a decline in turnover to GBP113.5m (US$136.4m) from GBP120.7m a year earlier. Operational losses increased by GBP1.3m to GBP4.9m.