COUNCIL officials suspected that all was not well with GHA Coaches Ltd four months before the company went into administration, it has been revealed.

Denbighshire County Council officers were so worried that they drew up contingency plans which then fell into place when the company was issued with a winding-up order by Her Majesty’s Revenue and Customs (HMRC).

The Ruabon-based company, which operated scores of services throughout North East Wales and the North West of England, ceased trading on July 13 with the loss of 320 jobs.

This week it was revealed that the company owed £5.2m when it folded and Traffic Commissioners have banned brothers Gareth and Alwyn Lloyd-Davies from becoming directors of any other company.

Denbighshire was one of the worst affected areas as GHA not only ran a large number of school contracts but also operated all local services in the south of the county, most of which were supported by the county council.

In a report to next week’s cabinet meeting transport manager Peter Daniels says: “In April concerns regarding GHA resulted in officers raising a risk and developing a contingency plan. In July officers immediately reinstated school transport as their top priority (and) during August officers tendered all GHA’s school contracts that were closed to the general public.”

The aim of the contingency plan was to ensure that all communities which had previously been served by GHA would receive some level of service.

“Initially, passengers seemed content and even relieved that at least some form of service had continued. With time, there was a growing concern that reduced reinstatements placed passengers in detriment,” says the report.

Stepping into the breach is expected to cost the council an extra £175,000 on school transport this year and next year the figure is likely to be £275,000. The net overspend on local services is anticipated to be £33,000 in 2016-17, but if like-for-like services had been introduced the figure 

would be £247,000.

In 2014-15 the authority’s budget for local bus services was £419,000 but the following year it was cut to £235,000, with no further reduction this year. With a Welsh Government grant of £435,000 – much the same as it was in 2013-14 – the total amount available is therefore £670,000, about 20 per cent lower than in 2014-15.

The council has not yet decided its budget for next year, but the report states: “We do know that costs, post GHA, are increasing sharply and that any additional government mitigation for 2016-17 will cease.

“It is also unclear whether the standard government grant will continue as it is. It is therefore prudent to consider exactly what the council can afford in future.”

Yesterday a Denbighshire County Council spokesman said: “Officers from the council highlighted some potential concerns during internal discussions in April, which resulted in the officers raising a risk and developing a contingency plan.

“This is normal operational experience. If we pick up on any concerns about operators, we will use our judgement to decide whether we need to put any contingency plans in place so that we are prepared to respond to any situation.

“The fact that GHA Coaches operated so many of our bus routes meant that it was always prudent to have a contingency plan in place to mitigate any risks if the company ceased trading.”

COLLAPSED bus firm GHA Coaches owed creditors more than £5 million.

Documents of accounts compiled by administrators Grant Thornton and seen by the Leader show the company, whose directors Arwyn and Gareth Lloyd Davies were disqualified from holding operating licences by traffic commissioner for Wales, Nick Jones, earlier this week, owed £5.3m to creditors.

The accounts show the firm was £978,461 in arrears to HMRC and also owed £26,248 to Cheshire West and Chester Council (CWaC) as well as £27,546 to Wrexham Council.

Other large creditors included Oldham-based International Tyres Ltd, who were owed more than £44,000, ATS Euromaster, who were owed more than £21,000.

And the firm also owed more than £88,000 to Meridian Driver Ltd, as well as £69,000 to Prema Energy and £11,618 to EON Energy Solutions.

According to the documents, administrators Grant Thornton were first involved with the comapny in 2013 to review the business and its funding needs.

In late March this year, Grant Thornton reviewed GHA’s short term funding needs after it became clear they had a shortfall due to trading losses and vehicle finance commitments.

GHA sought a formal deferral over its debts to HMRC and approached councils to try to secure £1.5 million in funding but were unsuccessful.

HMRC would not agree to a repayment plan and presented a winding up petition on June 20. HSBC subsequently froze the firm’s bank account on July 7.

The Davies brothers had hoped support of councils would provide enough funding to pay off their HMRC liabilities and fund the ongoing operation of the business.

But on July 11, they learned their funding bid was unsuccessful and trading operations ceased two days later on July 13, with almost 400 employees made redundant.

The company had its head office on the Vauxhall Industrial Estate in Ruabon, and was one of the largest independently owned bus and coach operators in the UK.

It operated 230 vehicles from six depots with additional depots at Ruthin, Denbighshire, Tarvin, Chester, Winsford, Cheshire West, Macclesfield, Cheshire East, and Shrewsbury, Shropshire.

In a letter to creditors, joint administrator Jason Bell, of Grant Thornton, said: “We do not expect realisations in the administration to be sufficient to fully repay the bank and the recoveries to the other secured creditors will depend on the value of the vehicles over which they have security and the realisation strategy the adopt in relation thereto.

“Preferential creditors will include unpaid pre-appointment wages for staff made redundant on the date of our appointment (subject to statutory limits), accrued holiday pay and unpaid pension deductions.

“Whilst claims continue to be processed, we estimate that total preferential claims may be of the order of £100,000. Based on current estimated realisations of the assets we expect preferential creditors to be paid in full.

“The company’s trial balance at appointment indicated unsecured liabilities of £5.3 million, including deferred tax and grant creditors but excluding any shortfall suffered by finance companies in respect of the liabilities secured thereon.”