Wholesaler Palmer & Harvey has collapsed into administration, causing 2,500 redundancies and leaving another 900 jobs at risk.
The business had struggled with cashflow problems since the beginning of this year and had failed to secure the additional funding it needed.
It stopped deliveries and called in administrators PwC on Tuesday after it uncovered a serious cashflow problem amid “challenging trading conditions”.
Palmer & Harvey delivers groceries and tobacco to 90,000 grocery and convenience stores including Costcutter, Sainsbury’s and Tesco. Costcutter and Sainsbury’s have contingency plans in place to avoid shortages, while Tesco said it would work to ensure it met customer need.
The business’ collapse comes amid a huge shake-up in the convenience and wholesale market, kickstarted by Tesco’s takeover of Booker, which was announced in January and given provisional clearance by the Competition and Markets Authority a few weeks ago.
Palmer & Harvey itself was eyed by Sainsbury’s in May but the big four grocer abandoned its plans and instead entered exclusive talks with Nisa, which was itself then swooped on by the Co-op. That tie-up won the approval of Nisa shareholders earlier this month.
Most recently, Palmer & Harvey had been in exclusive talks with private equity firm Carlyle, which was expected to take over the business before Christmas.
It has now emerged that those talks broke down on Tuesday after the wholesaler discovered a severe cashflow problem.