Lancashire tea founder considers legal battle against bank to save the company
Nov 19 2009 Liverpool Daily Post
Paul Needham, MD of Lancashire Tea Company 300
A MERSEYSIDE businessman will today seek a court injunction to prevent a bank closing down his firm.
Lancashire Tea founder Paul Needham is set for a legal battle with banking giant Royal Bank of Scotland in a bid to save the business.
A division of the bank – asset lender RBS Lomard – is, according to Mr Needham, threatening to seize machinery from the collapsed Newton-le-Willows firm in lieu of a £20,000 debt.
However, he says he has lined up an investor who is willing to keep the firm, which employs 40 people, going and pay off the bank.
He intends to seek an injunction today that would prevent RBS Lombard from seizing the machinery and effectively closing the business.
News of the fight comes just a day after a senior RBS banker pledged in an interview with the Daily Post that it would not pull the plug on any business with a viable future.
Last night, Mr Needham said: “We have a viable business here. We have an investor willing to buy the business and pay back the bank.
“We also have major supermarkets who want to carry on selling our products and are ready and waiting to take more stock.”
For the last few months, Mr Needham and his business partner, Lynn Hitchen, have been keeping the firm going using more than £60,000 of their own money. Its cashflow crisis was the result of RBS pulling its factoring facility in February which meant the company received no money from February to June.
On November 11, the company was placed into administration and corporate recovery specialists Tenon were appointed to seek a buyer.
Tenon would not comment on Mr Needham’s claims last night. A spokesman said it was still trying to negotiate a deal that would “satisfy all parties”.
Mr Needham added: “We have continued to pay the staff for the last two weeks out of our money because none of it is their fault and if we were to lose them then that would be the end.
“But we can’t keep doing that indefinitely. If we can’t save the business, then Lynn and I could be paying off debts for the rest of our lives.”
Last night, Royal Bank of Scotland declined to comment on Mr Needham’s claims but said negotiations were ongoing with all interested parties.
In the Daily Post business section yesterday, Peter Ibbetson, chairman of the state-controlled RBS/NatWest group’s small business banking division, said the bank would not force the closure of healthy businesses.
“We do not withdraw liquidity from or an overdraft from a viable business,” he said.
He added he wanted to get the message out that the RBS/Natwest group was committed to supporting small businesses in the region and across the UK.
Lancashire Tea has been fighting against the effects of the recession and record tea prices.
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