In a surprising revelation, the financial intricacies of York Cocoa House Ltd, the esteemed chocolate-making business based in Castlegate, York City Centre, have been laid bare in a recently published 36-page Statement of Administrator’s Proposals on the Companies House website. The report, serving as a comprehensive interim review of the company’s administration, discloses that the business was in debt to the tune of more than £1.2 million before being acquired for a mere £60,000 in a pre-pack administration deal.
Founded in 2011 by Sophie Jewett, York Cocoa House Ltd, trading as York Cocoa Works, succumbed to administration in November, leading to its acquisition by YCW Trading, a company based in Castlegate with Mark Turner, a 57-year-old Bermudian and UK resident, serving as its sole director.
The Administrator, Frazer Ulrick of Auker Rhodes Accounting, highlighted the company’s journey from its inception in 2011 to its winding-up petition by HMRC in 2019, leading to a Company Voluntary Arrangement (CVA) in February 2020. The onset of the pandemic severely impacted the business, hampering its ability to trade according to projections. The report outlines that the holding costs of sustaining the business were too substantial to meet the CVA’s obligations.
By the summer of 2023, it became evident that concluding the CVA successfully was unattainable. The business faced imminent threats, with the electricity provider considering disconnection due to accumulating charges, and HMRC contemplating a winding-up petition. The dire situation prompted discussions around administration and liquidation.
To assess the company’s value, BPI Asset Advisory was appointed, leading to a swift marketing of assets to avoid closure. The two-week process attracted 13 expressions of interest and one offer. The report asserted that liquidation would have been impractical, given its high cost and minimal prospects of returning funds to creditors. Only a pre-pack sale, negotiated before formal administration, could ensure any returns to creditors.
While the directors of Cocoa House are yet to produce a ‘Statement of Affairs,’ the administrator identifies liabilities amounting to £1,242,465. Unsecured trade and expense creditors, including subcontractors and suppliers, are owed approximately £317,547. Additionally, loans from directors total £416,839.
A detailed list of 40 creditors includes notable entities such as City of York Council (£44,000), Evora Construction (£98,349), Evershot Construction (£25,585), and individuals like Sophie Jewett (£129,934), Mark Lister (£202,684), Michelle Proctor (£80,000), and Saugu of Bogota, Columbia (£2,038).
The report indicated the absence of secured creditors or primary preferential creditors, with HMRC being a secondary preferential creditor, claiming £508,076 in VAT, PAYE, and National Insurance, covering both pre and post CVA liabilities.
Despite the challenging financial scenario, the report expressed optimism regarding a dividend to be paid to HMRC. However, there were “insufficient realisations” for any distribution of remaining assets to non-preferential creditors.
The estimated ‘Statement of Affairs’ outlines assets valued at £60,000, mirroring the amount YCW Trading paid for the business. The report acknowledges YCW’s offer as ‘disappointing’ but underscores its significance as being ‘significantly higher’ than the value that would have been achieved through an auction.
In conclusion, the financial woes of York Cocoa House Ltd underscore the challenges faced by businesses in the wake of the pandemic. The acquisition through a pre-pack administration deal provides a lifeline, albeit at a fraction of the company’s former value. The future for the iconic chocolate maker remains uncertain, with creditors hoping for a return despite the financial setbacks. The resilience of businesses in the face of adversity is once again put to the test, emphasizing the need for adaptive strategies and financial prudence in these trying times.
