Doughnut specialist Project D has agreed to a Company Voluntary Arrangement (CVA) with its creditors over debts totalling more than £286k.
Despite a CVA being a process that enables a company to negotiate the repayment of its debt rather than filing for liquidation or insolvency, the Derby-based brand stated that its core wholesale business was “as strong as ever”.
Debts were related to the retail ‘bricks and mortar’ aspect of the business, it claimed, not the bakery or wholesale sides of the operation.
Project D runs a 11,000 sq ft factory in Spondon with a capacity of 17 million doughnuts per year. A downturn in customer spending and unexpected shop fit-out expenditures lead to a loss-making quarter and eventually the closure of three of its four retail locations over the past few months. These include its flagship store in York, and its shopping mall outlets in Nottingham’s Victoria Centre and Sheffield’s Meadowhall, the latter of which has resulted in some minor restructuing of one of Project D’s operating companies, it said.
The company noted that its reminding kiosk at Heathrow Terminal 2 has proven to be successful, while online sales have increased by 50% compared to the same time last year.
“As a team we’ve been focusing on bakery efficiencies, large wholesale customers, an improved online gift offering, working with bigger event partners and an improved doughnut offering,” commented co-founder and marketing manager Max Poynton. “We’ve had the strongest performing month of May in three years and June is trending even stronger.”
Poyton declared that Project D’s “commitment to innovation and excellence remains unwavering”, and expressed gratitude for the ongoing support from loyal customers and partners. “We look forward to continuing to serve customers with our delicious doughnuts for many years to come,” he added,
Project D regularly comes out with new recipes and designs, such as the ‘It’s Coming Home’ doughnut box launched last week to support England’s campaign at the 2024 UEFA Euro football championships.
A virtual meeting between Bugibba Independent Ltd (which trades as Project D) and its creditors was held on 29 May 2024, with the majority accepting the proposed repayment arrangement.
Of the debts that totalled £286,702, the largest was for just over £120k owed to HMRC for unpaid tax bills. Roughly £26,600 was owed to Barclays Bank, with other creditors including firms involved in recruitment, packaging, PR, food photography, and financial management, as well as West Midlands Safari Park.
Outstanding payments of £45,750 to Poynton as well as to his fellow director Jacob Watts, along with £9,500 to the remaining member of the co-founding trio, Matt Bond, would not be made as per terms of the agreement.
CVAs have helped other bakery businesses to bounce back from the brink of insolvency such as Warrens, which recently reported a 10% increase in sales during its latest financial year. The company completed its CVA in 2022, around three years earlier than anticipated.
Project D has had a rollercoaster ride over the past year, enjoying a hugely successful crowdfunding campaign which saw it smash its target by almost a third in raising £524k to help turbocharge growth.
However, this was followed by its reported difficulties in establishing a retail estate. In addition, an employment tribunal ordered Project D to pay over £31k to a former employee after ruling she had been discriminated against in pursuing a sexual harassment case.
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