Wrightbus owed £38m to Bank of Ireland when it collapsed

Administrators warn bank that amount owed will not be repaid in full

Wrightbus, the Ballymena bus builder, owed Bank of Ireland £38.1 million (€44.7 million) on the day it collapsed, and administrators have warned that the bank will not be repaid “in full”.

However, Invest NI, the North’s regional business development agency, which was owed £2.5 million, will get back all of the money it lent the business, according to administrators from Deloitte.

The administrators have indicated that the amount owed to preferential creditors, which include redundancy payments to former employees, arrears of wages, salaries and holiday pay, will also be “paid in full”.

But they have warned that they “do not anticipate that there will be sufficient asset realisations to enable a distribution to be made to unsecured creditors”, which are owed more than £20.6 million.

The formerly family-owned Wrightbus, which was placed in administration on September 25th with the immediate loss of 1,200 jobs, had been one of the North’s most successful manufacturers.

Nearly a month after it collapsed the Bamford Bus Company agreed a deal to buy the business and assets of Wrights Group Limited (the parent of the trading group), Wrightbus Limited, Wright En-Drive Limited and Metallix Limited.

Earlier this week Jo Bamford, who owns the Bamford Bus Company, said he hoped to be in a position to re-employ 500 workers at Wrightbus next year.

Failure and distress

In the meantime, the joint administrators from Deloitte, Michael Magnay and Peter Allen, have outlined the reasons for the “failure and distress” of Wrightbus and its associated firms in their latest report.

They note that the companies experienced a decline in trading performance in 2017 because of a number of factors, including: a slowdown in demand in the UK bus market, “unforeseen inefficiencies and complexities” that arose from the consolidation of its operations into a new facility, and also loss-making contracts in southeast Asia.

The administrators’ latest report shows that over the eight-month period up to August 2019, the bus group’s pretax losses totalled £19.5 million.

According to the joint administrators, Deloitte Consulting was initially engaged by directors at the Wrights Group back in May this year to “identify opportunities for cost reduction”, and although the directors developed a turnaround plan, they could not fund it.

By June the bus group’s directors had decided that the best course of action was to pursue a potential accelerated mergers and acquisition sale. Deloitte Financial Advisory was then appointed.

In the same month both Bank of Ireland and Invest NI agreed to provide an additional line of funding totalling £5 million to allow the Wrights Group more time to find a buyer.

Interested parties

Deloitte approached 49 interested parties at this stage, and 26 signed non-disclosure agreements, two “credible offers” were pursued but then both these offers were “withdrawn” on September 20th.

The joint administrators said Deloitte tried to “revive” these offers but this proved unsuccessful and they were then appointed to Wrightbus Limited, Wrights Group Limited, Wright En-Drive Limited, Metallix Limited and Wright Composites on September 25th.

The ultimate parent company of Wrights Group was the Cornerstone Group, a privately owned organisation controlled by members of the Wrights Group, including the group’s founder, William Wright, and his son, Jeff Wright, who is also a director and pastor of Green Pastures, the People’s Church in Ballymena, which is a charity.

The latest accounts for the Cornerstone Group show that from 2010 to 2017 it made charitable donations amounting to £15.38 million to fund its “commitment to Christian, evangelical and other charitable activities”.

Separate to the administrators’ latest report, the North’s Department for the Economy on Thursday confirmed that it had received 927 claims for redundancy payments from former employees of the Wrights Group.

In a statement the department confirmed it would pay out “approximately £8 million, which is made up of redundancy and insolvency payments of unpaid wages, pay in lieu of notice and unpaid holiday pay”.