Major food brand that sold household staple in Asda & Ocado went bust owing £22MILLION in debt
The company provided over 3,000 British shops with fresh basil and salad mixes.
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Vertical farming start-up Jones Food officially went into administration in April (stock image)
Credit: Getty
Major farming start-up Jones Food, which is backed by Ocado, officially entered administration in April.
The vertical farming trailblazer has previously been hailed as a game-changer for Britain's farming industry.
This set-up has allowed vegetables to be picked next door to delivery depots, offering shoppers access to fresher than ever produce.
However, the farming venture has struggled after Ocado signalled that it was not willing to provide more cash to the start-up.
After failing to find a new backer, the company is unlikely to recoup the millions of pounds it pumped into the start-up.
Costs of adminstration
This includes £8.6 million of initial investment in 2019 and a £3.7 million cash injection in 2023.
Filings for Jones Food's administration suggest Ocado could be facing a loss of over £20 million.
Administrators for the start-up said funds from the sale of the business' assets would go toward paying off expenses and creditors.
This marks another setback for Ocado, which has been battling to stem losses and churn out more cash in the face of higher debt costs.
It has made heavy cuts to its research team in an attempt to help boost profit and was recently hit by a tripling of its debt interest costs after refinancing looming bonds.
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Ocado Group
Ocado made a series of investments into tech start-ups in an attempt to break away form its image as an online grocer.
The company struck a deal with M&S in early 2019 to run the online grocer Ocado Retail as a joint venture.
Since then, Ocado Group has been focused on its robotic warehouses, which it has sold to other companies including Kroger in the US.
The collapse of Jones Food comes just over a year after the start-up opened its second vertical farm.
Ocado had said the farm was a 'coming-of-age for agricultural technology in the UK'.
What does going into administration mean?
WHEN a company enters into administration, all control is passed to an appointed administrator.
The administrator has to leverage the company's assets and business to repay creditors any outstanding debts.
Once a company enters administration, a "moratorium" is put in place which means no legal action can be taken against it.
Administrators write to your creditors and Companies House to say they've been appointed.
They try to stop the company from being liquidated (closing down), and if it can't it pays as much of a company's debts from its remaining assets.
The administrator has eight weeks to write a statement explaining what they plan to do to move the business forward.
This must be sent to creditors, employees and Companies House and invite them to approve or amend the plans at a meeting.
A Notice of Intention is used to inform concerning parties that a company intends to enter administration.
It is a physical document which is submitted to court, usually by directors aiming to prevent a company from being liquidated.
Like with a standard administration process, a Notice of Intention stops creditors from taking out any legal action over a company while they try and rectify the business.
It desribed Jones Food as having 'cracked the code for accessible, sustainable, premium food being grown all-year-round, at a super-competitive price'.
The farm provided herbs including basil, coriander, and flat-leaf parsley for Ocado and Asda.
However, vertical farming start-ups, which involves growing food on shelves, have struggled to become profitable.
In filings for Jones Food, administrators said it was loss-making as soon as it was operational.
They said this is because it was running at around a third or half of its factories' capacity, and demand from customers was variable.
'Jones Food is an innovative business, and Ocado Group has been a supporter and shareholder of the company for a number of years," Ocado said at the time of the administration.
"As we await the outcome of the administration process, our thoughts are with all those involved with Jones Food.'
More business stories
And a major drinks brand sold in Asda, Sainsbury's, and Morrisons has also gone into administration.
The UK's biggest music retailer also closed its doors last month.
Plus, a trendy restaurant chain closed down all its high street locations.
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