Vertex Panel Products Ltd has acquired debt-laden George Reynolds (UK) Ltd (GRUK) in a move designed to safeguard its key suppliers.

The acquisition will mean Vertex paying GRUK’s creditors about £1.8m in outstanding debts.

Vertex bought the assets of GRUK, the chipboard manufacturing plant at Shildon, Co Durham, in February this year, leaving all monies owed to be settled by the company. But as GRUK was no longer a trading company, it relied on the deferred consideration from Vertex to help clear its creditors.

Vertex says because much of the debt is still outstanding and some of the creditors are its suppliers, it feels obliged to assist them in receiving full payment.

A creditors’ meeting will be held on October 7 when Vertex will propose a Creditors Voluntary Arrangement (CVA) to settle the debts owed.

&#8220We have a responsibility to our suppliers, many of whom are creditors of GRUK. We wish to continue trading with them and to develop long term partnerships. We felt that this was the right and just thing to do.”

Joe Martoccia, managing director of Vertex

Joe Martoccia, managing director of Vertex, said: “We have a responsibility to our suppliers, many of whom are creditors of GRUK. We wish to continue trading with them and to develop long term partnerships. We felt that this was the right and just thing to do.”

Vertex says it initiated the CVA following lengthy negotiations with the previous GRUK management team. The company stresses that the arrangement will have no impact on its trading position.

Doug Wentworth, managing director of Taylormade Timber Products Ltd, a key supplier to Vertex and a creditor of GRUK, said: “This move should be applauded and is testimony to the philosophy which has been adopted by the new board of directors at Vertex.”