WHEN a company is wobbling on the brink of failure, what should their bankers do for the best?

The saga of the Lancashire Tea Company is an all too familiar one in difficult times. A small company that seemed at least to be keeping its head above water, until the point where its bankers decided to change the terms of keeping the finance flowing.

A few months of struggle, and then administration. This is the point where the banks and others step in, but with a fair chance that something can be salvaged and, with appropriate professional help, the company may well be able to continue in one form or another.

This is the point where Lancashire Tea found itself earlier this year. Now the former owners and managers have established a new source of investment, and with restructuring they reckon they should be able to keep Lancashire Tea running as a business. This is what administration is supposed to be all about.

Now it looks as if an arm of the Royal Bank of Scotland is about to throw a spanner in the works by demanding machinery, in lieu of a debt of £20,000.

If a reformed Lancashire Tea has access to £20,000 to pay off the debt, which it seems that it has, then we cannot understand why RBS Lombard insists on having the hardware instead. For the bank to take possession of it would ensure the end of Lancashire Tea. No machinery equals no product.

It all seems rather bizarre. Maybe the bank reckons it can get more money by seizing the machinery and then selling it on, but it all sits rather uncomfortably with the declaration in the Daily Post only yesterday by a senior RBS man that the bank “would not force the closure of healthy businesses”.