FM Rail - FM Rail Ltd Insolvency

FM Rail Ltd Insolvency

Even though Bob Gordon had promised a strong, profitable company, instead of a good profit the insolvency Administrators later reported that the merged company made £1,500,000 loss during 2005 and that the company was poorly managed and the financial administration was very poor.

It became clear that FM Rail's management were unable to properly control the company and it continued to make big losses, £2,300,000 up to September 2006. It had borrowed heavily, up to £2,000,000 from a combination of asset finance, director and shareholder funds and Barclays Bank. The company came to the end of its banking facilities and several County Court Judgements were received demanding payment. The company was badly in arrears to the HM Revenue and Customs in respect of unpaid PAYE and NIC and the landlord to the premises where FM Rail operated was owed circa £150,000 and was threatening legal action. On several occasions the company was not able to pay wages to its staff.

On 19 December 2006 a firm of insolvency specialists, Begbies Traynor, were appointed as Administrators. The Administrators sold the Fragonset maintenance business to Rail Vehicle Engineering Limited, a business run by Andy Lynch, the former FM Rail Managing Director. The Merlin Rail train operating licence and railtour operator Hertfordshire Rail Tours was sold to Victa Westlink Rail. Several locomotives have been sold or put up for sale.

Begbies Traynor reported to the creditors in a report dated 9 February 2007 and a Creditors Meeting held at the Midland Hotel, Derby, on 26 February 2007. The meeting was very well attended, especially by disgruntled FM Rail staff who asked searching questions regarding the unpaid wages. Bob Gordon, the original FM Rail Managing Director who had promised so much, and Jyoti Ferguson, the Finance Director from November 2005 to November 2006 were conspicuous by their absence. The business affairs were still not resolved by summer 2012, although unsecured creditors had been warned that they might only receive 1p in the £.