A WAREHOUSING and distribution firm collapsed owing more than £2million, it has emerged.

East Lancashire Warehousing laid off 60 staff in April when directors called in administrators after losing key contracts.

Now it has emerged that the company proposed a company voluntary arrangement (CVA) - the last throw of the dice before collapse - which failed earlier this year.

And the firm, of Lower Eccleshill Road, Eccleshill, Darwen, owed £2.2million, including more than £600,000 to staff.

Administrators from Manchester-based KPMG have revealed that East Lancashire Warehousing struggled in early 2010 after the country was gripped by freezing weather, affecting deliveries.

A key contract was also lost and bosses proposed a CVA to restructure debts, with 36 payments of £10,000 set to be made.

But a report to Companies House said: “Trading performance deteriorated further and from February 2011 the company was not generating sufficient funds to pay the required CVA contributions.”

The result was a breach of the CVA and administrators were immediately called in.

The KPMG report reveals the state of the finances at the point of collapse.

Trade and CVA creditors were owed £1.3million and there was a £142,000 shortfall in VAT.

The firm’s 60 employees were owed £62,000 in wages and another £576,000 in redundancy and holiday pay.

Administrators had enough cash to cover the £62,000 wage bill, classed as preferential creditors.

But just £105,000 is available to other unsecured creditors, leaving a huge shortfall.

East Lancashire Warehousing was founded more than 90 years ago by the Maudsley family. As recently as last year it had a turnover of £5.6million.