Tuffnells administration: why has Sheffield parcels giant gone bust? UK delivery firm’s demise explained

UK delivery giant Tuffnells has gone bust, with thousands of staff across the country set to lose their jobs.

The Sheffield-based company, which operated 33 depots across England, Scotland and Wales - as well as out of 160 destinations across the globe - has closed down its operations with immediate effect. While it focused on business-to-business deliveries, the news may indirectly impact consumers as a result of disruption to retailers.

It is the latest major firm to fall into administration over the last 12 months. Other big-name brands such as Paperchase, Missguided and Made have all gone under over the past year.

Tuffnells’ demise comes as businesses across the UK are battling high interest rates and lower sales volumes in the wake of the cost of living crisis. It is widely expected the Bank of England will hike its base rate again later in June, which could tip the country into a recession - an economic event that can lead to the collapse of businesses and higher levels of unemployment.

So, what has happened to Tuffnells - and what does its administration mean for you?

What is administration?

Administration is the process a company goes through when it can no longer pay back its lenders and creditors through its usual means of doing business - i.e. it goes bust.

It involves the company’s executives handing over control of the firm’s operations to specially-qualified people known as administrators, or insolvency practitioners. These people have to hold a licence to perform this role in the UK.

The administrators will assess whether the company can be restructured and continue to operate, or whether it needs to be carved up and sold. In both instances, their job is to ensure lenders and creditors get at least some of their money back.

Usually, consumers are among those in the queue to get their cash out of a collapsed business. If you have paid the firm for an item or service that you have not yet received, you essentially hold credit with that company. It can either give that credit back in the form of a product or a refund (when it is running as usual) or you might get your cash back from the administrators, if it’s gone bust.

The problem is, the general public tends to sit fairly low on the priority list of creditors or lenders. So, there are no guarantees you will get your money back - either partially or in full.

What has happened to Tuffnells?

In the case of Tuffnells, it is unlikely consumers will be at much risk of losing any money. The reason for this is that the delivery company mainly couriered items between businesses.

But you may be affected by delays in the arrival of products you’ve bought. Tuffnells worked with 4,000 businesses across the UK and around the world, including major brands like Wickes and Evans Cycles.

Given it has completely closed down its operations for the “immediate term”, some deliveries are likely to be stuck in depots or warehouses. However, its administrator Interpath has said it will be contacting Tuffnells customers in the coming days to allow them to pick up any packages that are stuck in transit.

The upshot of this shutdown is that 2,200 of the firm’s employees are being made redundant. Only 128 are being retained. A further 500 contractors will also be hit by the move.

The reason why Tuffnells has gone under is down to several factors that have stemmed the flow of money around the business, according to its administrator Interpath. The insolvency practitioner said the firm has been under pressure since 2020, when it was taken into independent ownership. Covid-19 pressures, mounting costs due to inflation and the “highly competitive nature” of the UK delivery market all led to cashflow struggles.

Having failed to secure further funding in recent weeks, Tuffnells’ management appointed Interpath on Monday 12 June. Richard Harrison, the managing director at Interpath Advisory and joint-administrator with Howard Smith, said it was a “devastating” day for the employees of one of the country’s “most recognisable logistics companies”.

“Regrettably, with deliveries suspended and with no prospect of them resuming in the immediate term, we have had to make the majority of staff redundant. Our utmost priority will be to provide all those impacted with every support they need in making claims to the Redundancy Payments Office and minimising disruption to customers.”