Hopes Northumberland Foods debt will be repaid

Nov 2 2010 by Brian Daniel, The Journal

A COUNCIL that gave a £250,000 loan to a failed food company is hopeful of being repaid following a takeover of the firm.

Northumberland County Council lent the money to Northumberland Foods at Amble, which has been bought by the Tyneside-based Longbenton Foods.

The loan in August 2009 went ahead despite a warning from the council’s head of finance of an unacceptable risk of the money not being repaid.

Some councillors also raised concerns and a repayment deadline of the end of last year was missed.

The company went into administration in August this year and ceased trading two days later, with all 250 staff being made redundant after a deal to sell the firm fell through.

The council has confirmed it was not repaid before the business went bust.

Last week, it was announced the company had been sold to fellow frozen food firm Longbenton Foods, the business which took over the old Findus factory on Tyneside after it was ravaged by fire and placed into administration.

The Amble site’s new owners have already re-employed 70 ex-Northumberland Foods staff, with 30 more set to follow, and resumed production. Longbenton Foods bosses last week said they had assistance from council staff in buying the firm, and said: “None of this could have been achieved without their dedicated support.”

Now the council has issued a statement expressing the hope that the money it is owed can be clawed back.

County council leader Jeff Reid said: “The decision to support Northumberland Foods in 2009 was based on the importance of the business to the economy in the Amble area.

“The collapse of Northumberland Foods at that time would have placed great strain on families and local services in that part of the county.

“The support given by us has helped to achieve this positive outcome and we hope that we will now recoup the county council’s investment.”

Andrew Haslam, of administrator Begbies Traynor, which handled the sale of Northumberland Foods, could not be reached for comment yesterday.

Last night, Steven Bridgett, county councillor for Rothbury, who opposed the loan, said: “I think anything that we could get back from the money we gave to Northumberland Foods will go to protecting frontline services and that is really what matters.”

But he added: “I think it is very unlikely. We are at the bottom of the list of creditors. There is a long list of people need to be paid back before we could even be considered.”