Millions owed to creditors of Pensworth Dairy

Dairy farmers, milk processors, and banks are among a large number of creditors owed substantial sums of money by milk processor Braeforge, which traded under the name Pensworth Dairy.

A combined total of over £25m is owed to more than 250 creditors by Braeforge, but up to £13m of this could go unpaid according to documents filed with Companies House this week.

See also: Farmers released from contracts with Pensworth Dairy

More than 20 of the creditors are owed in excess of £100,000, including several farming businesses.

Braeforge appointed administrators in February following the purchase of its largest customer, Kent Dairy, by rival milk processor Freshways.

Braeforge employed 300 staff across 12 depots at its height and was considered one of the leading dairy suppliers in the UK.

Assets of the business including depots at Leicester, Watford, and Aylesbury were sold by the administrators in pre-packaged sales.

The route to insolvency

A report produced by the administrators which was shown to Farmers Weekly and sent out to all known creditors provided a timeline of events leading to the company becoming insolvent.

During the pandemic, Braeforge reportedly lost about a third of its customers in the food service, education, and hospitality sectors.

Higher prices, labour shortages, and lower levels of production also played a part during this period.

The company then sold off seven depots to Kent Dairy Company, owned by David Terry, who was also a director at Braeforge from 2017 until May 2021.

Braeforge and Kent Dairy continued to work closely with each other with Kent Dairy being a major customer of Braeforge and accounting for about 80% of total sales.

In 2021, increases in the spot price for milk also had a significant impact on the cost of sales for Braeforge and severely impacted profitability.

The final blow came amid the sudden loss of its biggest customer, Kent Dairy, which had previously been in a long-term contract worth about £800,000 a week to the firm.