William & Frances May (“The Mays”) owned a 180-acre farm in Hertfordshire (the “Farm”). The business sold free range eggs and cider.
In 2008 they needed to obtain finance for the Farm in order to expand the business. They obtained £700,000 from the Agricultural Mortgage Corporation and Lloyds Bank Plc (“Lloyds”) and invested this capital in the business.
In 2010 the Farm was hit by a sharp rise in the cost of poultry feed, which placed additional pressure on the business’ cash flow. In response to these difficulties The Mays decided to try and add value to their product by creating a brand and for their eggs and selling them to retailers. The Mays negotiated a deal to sell their eggs to a major supermarket in March 2011 and shortly afterwards they began to sell their eggs to another major supermarket, who already purchased the Farms cider. The Mays were then awarded a contract to supply a global sporting event.
This new strategy began to turn the business around and help them overcome the difficulties caused by the recession and the increase in the price of poultry feed.
The Mays had taken out a loan that expired in March 2012 and Lloyds began to exert pressure onto The Mays to finance elsewhere. Lloyds wrote to The Mays on 9 March 2012 and advised that “the bank is prepare exceptionally to provide you more time to seek either alternative banking or debt reduction.”
The Mays had been speaking to Barclays Bank Plc (“Barclays”) regarding the possibility of re-financing their facilities away from Lloyds. However Barclays required that The Mays pay all their creditors (approximately £200,000) and inject fresh capital (approximately £100,000) before they would agree to take over the facilities. The Mays will state that Barclays shared their enthusiasm for the Farm and its continued growth.
In order to meet Barclays conditions The Mays arranged a sale of 35 acres of the Farm for £350,000.
However when the Mays discussed the possibility of refinancing their facilities with their relationship manager at Lloyds, Mr Fowler, he and his supervisor Mr Goldthrope, became obstructive to The Mays refinancing attempts and the sale of the 35 acres. This was despite the fact that Lloyds had written to The Mays and informed them that they could look to re-finance elsewhere on 9 March 2012.
The Mays account was then handed over to Customer Support and this caused further obstructions to their attempts to re-finance their facilities. Lloyds required Barclays to provide written consent to take over The Mays facilities, however Barclays were unwilling to do so until all their conditions had been met, which The Mays state Lloyds were well aware of before requiring Barclays to do this.
Lloyds then informed The Mays that in order to break the Treasury loan there would be a break fee equivalent to 13% of the overall loan facility. This high break fee proved prohibitive to The Mays and they were unable to refinance their facilities.
As a result of The Mays inability to refinance their facilities with Barclays and secure additional funding they experienced severe cash flow problems and were unable to pay one of their creditors on time. This meant the Mays incurred a County Court Judgment (“CCJ”) on 29 May 2012, which ended any prospect of the facilities being moved to Barclays.
Lloyds appointed an LPA receiver in autumn 2012 due to the fact the expired facility had not been repaid. As a result of this Mr May was declared bankrupt in April 2013 and Lloyds Bank began possession proceedings against the Mays.
Lloyds seized control of 100 acres of the Farm and began to let this to a third party, against the Mays wishes.
The Mays continue to defend the claims brought against them by Lloyds and have engaged the services of berg in this matter.