A well-known York business owed more than £1.2million before it was bought for £60,000 in a pre-pack administration deal.

The financial details of the former York Cocoa House Ltd are revealed in a 36-page Statement of Administrator's Proposals, published a week ago on the Companies House website.

The 'proposals' act as a kind of interim report on the administration of the business and its financial figures are subject to revision when further details emerge.

York Cocoa House Ltd, which is based in Castlegate, in York City Centre and trades as York Cocoa Works, went into administration in November.

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The business, founded by Sophie Jewett in 2011, makes and sells chocolate, has a chocolate-focussed cafe and also runs chocolate making workshops. Orginally in Blake Street it moved to moved to Castlegate in 2018.

As the Press recently reported, the venture was bought by YCW Trading, also of Castlegate. Its sole director is 57-year-old Bermudian, finance director Mark Turner, a UK resident.

In his report, Administrator Frazer Ulrick of Auker Rhodes Accounting recalls how the business was incorporated in 2011. In 2019, HMRC issued a Winding Up petition and the company entered a Company Voluntary Arrangement (CVA) in February 2020.

However, the report continued, the pandemic "impacted severely" on the firm's ability to trade in line with forecasts and the holding costs of keeping the business trading were "too significant to carry forward whilst fulfilling the CVA's obligations."

The company built-up further liabilities with HMRC in respect of tax and VAT and "struggled to keep up with its contributions" in line with the CVA.

By the summer of 2023 it was clear the company could not successfully conclude the CVA and possible administration and liquidation were discussed.

"The business had already been visited by its electricity provider and was under imminent threat of being cut off due to accumulating charges. HMRC had also indicated it was considering issuing a winding up petition against the company," the report continued.

BPI Asset Advisory were then appointed to value company assets, who then marketed them "on an accelerated basis to avoid closure". The fortnight-long process saw 13 expressions of interest and one offer.

The report says liquidation would have been problematic as it would be costly to implement. Had the company being wound up, there would be little prospect of any return to creditors. Only a pre-pack sale could deliver any return to creditors. A pre-pack sale is one that is agreed before a business formally enters administration.

The Cocoa House directors have yet to produce a 'Statement of Affairs' but the administrator said he identifies liabilities, or debts, of £1,242,465.

They include unsecured trade and expense creditors, including subcontractors and suppliers, owed approximately £317, 547. There are also loans to the company from directors totalling £416,839.

A list of 40 creditors includes City of York Council (owed £44,000), Evora Construction (£98,349), Evershot Construction (£25,585), Ms Sophie Jewett (£129,934), Mark Lister (£202,684), Michelle Proctor (£80,000) and Saugu of Bogota, Columbia (£2,038).

The report said the administrator was unaware of any secured creditors or primary preferential creditors. HMRC was a secondary preferential creditor, with a claim of £508,076 in VAT, PAYE and National Insurance, in pre and post CVA liabilities.

"It is anticipated a dividend will be paid to HMRC," it continued.

However, there were "insufficient realisations" for a distribution of any remaining assets to non-preferential creditors.

An estimated 'Statement of Affairs' lists assets of £60,000, the same as YCW Trading paid for the business.

The report added YCW's offer was 'disappointing' but this was 'significantly higher' than if the assets were sold at auction.