Merchant failure fallout drags on with stored grain disputes

The fallout from the failure of Scottish grain merchant Alexander Inglis & Son continues, with the sale of stores held up by issues surrounding the extent, ownership and value of stored grain.

The company went into administration in May, with unsecured creditors owed £6m-plus. It has since been confirmed that the hundreds of unsecured creditors, many of them farmers, will get nothing of what they are owed.  

The administrators put the likely overall shortfall at £70m-plus once claims for third-party stored grain were taken into account. However, trade estimates put it at £80-£100m.

In Morpeth, Northumberland, NFU group secretary Stephen Rank knows of many farmers affected, with some owed up to £100,000.

“We know some have had to look at their assets and maybe realise some of them to cover the debt or to manage and stay within their overdraft limit,” he said.

The company owned four main stores and the administration has been complicated by claims for large tonnages of grain stored by the Inglis business as a service to the owners of that grain – mainly trade, but including many farmers.

See also: Report reveals devastation of grain trade failure

The Inglis store at Swarland was sold to farmer co-op North East Grains for £1.78m, taking the group’s storage capacity to more than 100,000t.

North East Grains managing director Matthew Curry said the knock-on effect of the Inglis administration on farming, the merchant trade and related businesses such as hauliers was colossal.

On completion of the sale, Swarland, with a capacity of more than 40,000t, still contained 25,000t of disputed stored grain.

Mr Curry said agreement had now been reached so that most of the farmers with grain stored there had received at least 48% of the value of their claim, or had been allowed to collect the equivalent tonnage.

Stored grain agreements

Agreement has also been reached between the administrators and claimants on much of the third-party grain stored across the four sites, with the exception of a large tonnage of malting barley, some of which may be the subject of legal action.

The administrators will not disclose the terms of each settlement, but said these vary depending on the grain type, given different levels of shortfalls in each type. 

Trade impact

Many merchants had grain stored with the company but few have submitted accounts since the administration was announced.

This week saw the publication of accounts to 31 December 2020 for trader Cefetra, owned by German energy, agriculture and building materials group BayWa.

The company said that while grain merchant Alexander Inglis & Son had gone into administration in May 2021, owing it £3.7m, Cefetra had several insurance policies designed for such instances and remained in talks with providers about this.

Farmer co-op GrainCo wrote off £4.5m in its accounts to 30 June 2021 to cover stored grain losses as a result of the administration.

However the group still made a pre-tax profit, despite this write-off. GrainCo managing director Gary Bright pointed out that the company had a strong balance sheet, with net assets of £20.6m.

“We have a full recovery stock insurance policy, so I’m confident the loss [of the stored grain value] will be recovered,” he said.

Stock issues hold up sales

A sale contract was agreed on 16 September for the Errol store, with this expected to complete once the stored stock position is resolved, said a spokesperson for the administrators.

Bids have been received for the two remaining stores at Ormiston and Charlesfield, but owing to the stock position and there being no ability to free up any space at these sites, it has not been possible to complete their sales.