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Jonathan Straight on a strained relationship with Lloyds Bank

Jonathan Straight, former chief executive at bin manufacturer Straight plc, told MRW of the problems he had with Lloyds Bank before the business was sold in May this year.

“Through a number of years running up to 2012 we were working with Lloyds Bank. We had a very stormy relationship with them through the whole of that year, not because we had missed any repayments on our loans or we were behind or anything like that, but because we breached a covenant.

“The loans were to expand the business. We were persuaded to sign up to a relationship between profitability of the company and the level of debt and in one quarter we did beat the figure.

“As a consequence of this the business was put into the hands of Lloyds’ Business Support Unit.

“Their position was to help the business get back to financial health and put it back into mainstream banking. The way that they did this was to increase the rate of interest they charged us, fine us for breaches and insist we engage PwC to do a number of pieces of very expensive exploratory work.

“I would estimate the cost of this entire charade to be something like £500,000, which was money the business couldn’t afford and was more than the business would have needed to ‘get out of jail’ as it were.

“They didn’t help us at all, they made matters considerably worse.

“We were fortunate that we were able to refinance the business in 2013, and that led to its successful sale and my exit from it.

“It was a very unpleasant time and their behaviour was, in my view, totally unacceptable.”

Lloyds’ response:

“We provided extensive support to this customer, without which we do not believe the business could have survived. This support included a £300,000 emergency overdraft on the customer’s request; a £2.5 million working capital facility providing increased headroom; allowing the business to operate its commercial finance facilities at 100% drawdown; and the waiving of numerous covenant breaches. The customer makes a number of allegations, all of which we refute entirely.

“Our aim from the outset was to help the customer manage its way through its difficulties and we did everything within our gift to offer the funding and flexibility it needed. We firmly believe that had we not supported the business, it would have failed, denying all of the shareholders – including Mr Straight – of any value. Our support ensured the business could be saved and sold, delivering a multi-million pound windfall to Mr Straight.

“Our Business Support Unit helps business in financial stress to be turned around and more than two thirds of customers that go into our Business Support Unit are helped back onto a sounder financial footing. So far this year more than 1,000 business customers have been returned to our mainstream relationship teams.”

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