Llangollen Railway appoints receivers

[JonathanH]

Which does make you wonder why the receivers were called in, rather than the plc just selling some of its own rolling stock to pay the debts.

It seems that at the time it is unlikely that they knew what their assets actually were or how to best realise the value of them. Would they have figured that one of their carriages was actually worth nearly £40,000 - indeed more than that with buyer premium and VAT added on?

 

[Mcr Warrior]

Which does make you wonder why the receivers were called in, rather than the plc just selling some of its own rolling stock to pay the debts.

Might possibly have been the secured creditors who called the receivers in, because they had gotten fed up of the plc not doing that much to pay off their debts, or some other breach of plc obligations.

 

[BayPaul]

It seems that at the time it is unlikely that they knew what their assets actually were or how to best realise the value of them. Would they have figured that one of their carriages was actually worth nearly £40,000 - indeed more than that with buyer premium and VAT added on?

Might possibly have been the secured creditors who called the receivers in, because they had gotten fed up of the plc not doing that much to pay off their debts, or some other breach of plc obligations.

Either sound like plausible options. I guess both do indicate a lack of financial control ability on the part of the plc in any case.

 

[Tobbes]

Might possibly have been the secured creditors who called the receivers in, because they had gotten fed up of the plc not doing that much to pay off their debts, or some other breach of plc obligations.

I thought I'd read that the bank had indeed called in the receivers. Well, at least there's some hope for some of the other groups owed money from the collapsed engineering operation to recoup some of their losses - I'm thinking in particular of the Patriot group.

 

[reddragon]

I just hope nobody from the old PLC board are allowed anywhere near a Heritage Railway ever again except as a passenger!

 

[Bletchleyite]

I just hope nobody from the old PLC board are allowed anywhere near a Heritage Railway ever again except as a passenger!

I have a feeling they won't bother being a passenger on the Llangollen for a while either...doubt their presence would be appreciated!

 

[Mcr Warrior]

I thought I'd read that the bank had indeed called in the receivers.

Bank could well have been a secured creditor. They are not mutually exclusive terms.

 

[Dai Corner]

Bank could well have been a secured creditor. They are not mutually exclusive terms.

See post #2 above

The Directors had no choice as the company could no longer legally trade.

 

[Mcr Warrior]

See post #2 above

Ta. Thanks for clarifying.

 

[BayPaul]

See post #2 above

The Directors had no choice as the company could no longer legally trade.

Yes and no

"
The company’s accounts show pre-tax losses of £330,601 in 2018, £329,175 in 2019 and £258,804 in 2020 (pre-audit). A number of significant engineering contract disputes, all of which arose in the years prior to the current board taking over in October 2020, have crystallised in the last few days. The claims against the company are compelling and are in excess of £250,000 in total. There is no prospect of meeting these liabilities, even over an extended period.

As a result the balance sheet is now insolvent to the extent of £350,000 approximately, adjusting for intangible assets also. In such circumstances the company cannot legally continue to trade.
"

It does feel like they got their sums wrong in making these calculations. If they only owed £350k, but had £500k of rolling stock able to be sold, then they did have a prospect of meeting the liabilities. I wonder if they didn't realise that the plc owned the rolling stock (i.e. they thought it was 'sheltered' within the charity), so got a shock when it was discovered that the receivers decided that they were allowed to sell it.

Alternatively, another way of reading this is that we (railforums) were incorrect when we read that the debt owed was £350k - it says here that the balance sheet was insolvent to the extent of £350k, but it is quite possible that that was equal to say £1M of debt, and £650k of assets, which were sold below their book value for £500k.


It certainly sounds like it is more complex than anyone would be able to deduce from public statements

 

[Stroud Valleys]

Does anyone know whether the trust was successful in buying any of the items up for auction and who has been successful in buying the rest of the items?

 

[kje7812]

Does anyone know whether the trust was successful in buying any of the items up for auction and who has been successful in buying the rest of the items?

The Trust has announced on facebook that they have brought the Case Rexquote Road Rail Vehicle (RRV), Plasser Theurer 12t Rail Crane, Lowmac Wagon with Atlas Crane and Mk1 TSO M4858. There are suggestions that two of the other coaches (a TSO and the functions coach) have been brought privately with intention for them to remain at Llangollen.
I haven't heard anything else yet.

 

[35B]

I just hope nobody from the old PLC board are allowed anywhere near a Heritage Railway ever again except as a passenger!

As individuals, they have involvement in other projects, which have now moved away from Llangollen.

Yes and no

"
The company’s accounts show pre-tax losses of £330,601 in 2018, £329,175 in 2019 and £258,804 in 2020 (pre-audit). A number of significant engineering contract disputes, all of which arose in the years prior to the current board taking over in October 2020, have crystallised in the last few days. The claims against the company are compelling and are in excess of £250,000 in total. There is no prospect of meeting these liabilities, even over an extended period.

As a result the balance sheet is now insolvent to the extent of £350,000 approximately, adjusting for intangible assets also. In such circumstances the company cannot legally continue to trade.
"

It does feel like they got their sums wrong in making these calculations. If they only owed £350k, but had £500k of rolling stock able to be sold, then they did have a prospect of meeting the liabilities. I wonder if they didn't realise that the plc owned the rolling stock (i.e. they thought it was 'sheltered' within the charity), so got a shock when it was discovered that the receivers decided that they were allowed to sell it.

Alternatively, another way of reading this is that we (railforums) were incorrect when we read that the debt owed was £350k - it says here that the balance sheet was insolvent to the extent of £350k, but it is quite possible that that was equal to say £1M of debt, and £650k of assets, which were sold below their book value for £500k.


It certainly sounds like it is more complex than anyone would be able to deduce from public statements

I read “insolvent to the extent of £350k” to mean that the total value of the company’s assets, as understood at the time the accounts were prepared, was £350k less than the debts that they owed.

 

[Titfield]

It will be interesting to see if, by having a smaller fleet, Llangollen Railway are able to deliver the same sort of service as previously and at the same time be "unburdened" by having a smaller maintenance / restoration commitment.

 

[John Luxton]

It will be interesting to see if, by having a smaller fleet, Llangollen Railway are able to deliver the same sort of service as previously and at the same time be "unburdened" by having a smaller maintenance / restoration commitment.

They have a fantastic railcar fleet! Whilst I like steam I must admit traditional DMUs are very much my scene and I think selling the forward views as a great way of seeing the Dee Valley.

 

[Bletchleyite]

They have a fantastic railcar fleet! Whilst I like steam I must admit traditional DMUs are very much my scene and I think selling the forward views as a great way of seeing the Dee Valley.

True, though the appeal may be slightly limited - people still want steam. The Wensleydale and Ecclesbourne Valley both realised that, having started as mostly DMU railways and increasingly now offering other stuff too.

 

[35B]

True, though the appeal may be slightly limited - people still want steam. The Wensleydale and Ecclesbourne Valley both realised that, having started as mostly DMU railways and increasingly now offering other stuff too.

But Wensleydale, on cost grounds, now pulling back from steam.

 

[John Luxton]

True, though the appeal may be slightly limited - people still want steam. The Wensleydale and Ecclesbourne Valley both realised that, having started as mostly DMU railways and increasingly now offering other stuff too.

True but I think that for many, including non-enthusiasts, first generation DMUs are so removed from the current offering as to be nostalgic in their own right. I was just coming up 9 when steam ended and being in LIverpool witnessed it to the very end - but much of my childhood and teen years were spent on DMUs both locally and further afield.

The forward view made the trip - as the second generation appeared which lacked the forward / receding views - I virtually gave up on main network train travel in favour of the car - I had by then passed my test - and strated driving to locations for the heritage experience.

One of the things I like about Llangollen is the heritage DMU fleet and in particular the Wickham - DMU perfection in my book.

 

[Bletchleyite]

True but I think that for many, including non-enthusiasts, first generation DMUs are so removed from the current offering as to be nostalgic in their own right. I was just coming up 9 when steam ended and being in LIverpool witnessed it to the very end - but much of my childhood and teen years were spent on DMUs both locally and further afield.

That's certainly how it was for me - a Class 101 is the perfect ride for a scenic branch (and I've driven the one at Wirksworth, too). But you won't find families taking their kids for a ride on a DMU, so you shut out a good part of the market by just running DMUs.

 

[EbbwJunction1]

I wonder whether they're going to revive the engineering side under new management?

The sale of some of the equipment might mean that they can't, but until the major problems occurred, was it profitable for them?

 

[John Luxton]

I wonder whether they're going to revive the engineering side under new management?

The sale of some of the equipment might mean that they can't, but until the major problems occurred, was it profitable for them?

It appears as though they had a good reputation for engineering until things went pear shaped. Didn't they do the GWR Steamrail Motor and the Patriot Project appeared very much a Llangollen thing until it soured. It is probably a cautionary tale for other lines that derive a additional income from contract engineering to ensure that their quality control is up to scratch as it is obvious from what has appeared in the railway press there were serious issues at Llangollen in recent years which undermined the business.

 

[EbbwJunction1]

Thanks; that was what I was thinking.

 

[the sniper]

That's certainly how it was for me - a Class 101 is the perfect ride for a scenic branch (and I've driven the one at Wirksworth, too). But you won't find families taking their kids for a ride on a DMU, so you shut out a good part of the market by just running DMUs.

Personally I find them preferable over loco hauled stock, if only for the view out of the front/back. I doubt most normals nowadays even know of that feature on 1st Gen DMUs though.

 

[paul1609]

That's certainly how it was for me - a Class 101 is the perfect ride for a scenic branch (and I've driven the one at Wirksworth, too). But you won't find families taking their kids for a ride on a DMU, so you shut out a good part of the market by just running DMUs.

At the K & ESR pre covid we used our class 108 largely on days when there wernt enough customers to justify running 2 steam trains. Many of our passengers break their journey to visit other attractions such as Bodiam Castle running the DMU allows the roughly hourly service at a much lower running cost. A fair number of people will do steam one way and diesel the other but its fair to say the numbers that come for the dmu are greatly outweighed by those who turn their nose up at it.

 

[Titfield]

At the K & ESR pre covid we used our class 108 largely on days when there wernt enough customers to justify running 2 steam trains. Many of our passengers break their journey to visit other attractions such as Bodiam Castle running the DMU allows the roughly hourly service at a much lower running cost. A fair number of people will do steam one way and diesel the other but its fair to say the numbers that come for the dmu are greatly outweighed by those who turn their nose up at it.

Yes the Swanage has a two loco in service timetable (shoulder season) that is 1 steam and 1 diesel (was the 108 DMU). We get many who turn up for a train find its a dmu and wait for the steamer 40 minutes later.

 

[alexl92]

Apparently the Llangollen’s 50-ton Cowans Sheldon Crane (ex-Laira depot breakdown crane), which is in full working order, was sold to a scrap merchant for around £35k, who now wishes to break it up on-site for scrap.
The railway are appealing to wealthy enthusiasts who would be willing to make the scrap merchant an offer for it to keep it in once piece.

 

[Grumpy Git]

Apparently the Llangollen’s 50-ton Cowans Sheldon Crane (ex-Laira depot breakdown crane), which is in full working order, was sold to a scrap merchant for around £35k, who now wishes to break it up on-site for scrap.
The railway are appealing to wealthy enthusiasts who would be willing to make the scrap merchant an offer for it to keep it in once piece.

The bloke who does my fabrication work told me last week that the price of mild steel sheet had trebled in the last 12 months. The stockholders are rationing how many sheets they can deliver!

It was abot £600 a ton in March 2020, its now about £1,800 a ton.

 

[RuralRambler]

It seems that at the time it is unlikely that they knew what their assets actually were or how to best realise the value of them. Would they have figured that one of their carriages was actually worth nearly £40,000 - indeed more than that with buyer premium and VAT added on?

The VAT isn't their's to keep. It has to be paid to HMRC, so not really relevant.

It appears as though they had a good reputation for engineering until things went pear shaped. Didn't they do the GWR Steamrail Motor and the Patriot Project appeared very much a Llangollen thing until it soured. It is probably a cautionary tale for other lines that derive a additional income from contract engineering to ensure that their quality control is up to scratch as it is obvious from what has appeared in the railway press there were serious issues at Llangollen in recent years which undermined the business.

More that ancilliary businesses with a potential of large losses should be hived off to subsidiary companies so that if they go down, they don't take the main operating company with them.

 

[JonathanH]

The VAT isn't their's to keep. It has to be paid to HMRC, so not really relevant.

No, obviously, but the fact that there were additional fees on top indicates a higher cost to the buyer (and hence value to the purchaser) than the money that went to the creditors.

 

[JKF]

Personally I find them preferable over loco hauled stock, if only for the view out of the front/back. I doubt most normals nowadays even know of that feature on 1st Gen DMUs though.

I suspect many from back in the day (my day being the early 80s) won’t either, as you seldom got to experience it, on most journeys the driver would pull the blinds down. I can only remember one trip with a forward view, which happily was going through the Severn Tunnel.