The behind-the-scenes story of how Yellow Buses collapsed

A new report from the company's administrators has revealed the steps taken by the much-loved bus company to avoid the worst outcome.

The document said Yellow Buses had an increasingly old fleet of buses, low passenger numbers after Covid and this, along with rising fuel costs, meant a collapse was obvious to many close to the business. 

Alarm bells started ringing amongst the 320 employees when the three directors started searching for potential buyers of the company.

Directors approached “a number of large operators” who they considered could benefit from cost synergies of up to £1million a year by adding Yellow Buses to a larger portfolio.

Yellow Buses

With no progress, despite the help from the Department of Transport’s two cash boosts from the Bus Recovery scheme and Bus Service Operators Grant, directors turned to Bristol-based administrators Milsted Langdon on June 29.  

“It soon became apparent that the directors were unlikely to be able to negotiate a sale outside of a formal insolvency procedure,” said Simon Rowe of Milsted Langdon in his report registered on Company's House as part of the administration process.

By July 1, it was agreed the administrators, who spent nearly 600 hours on Yellow Buses at an average hourly rate of £188 totalling £112,000, would help with the marketing of the business. 

Read more: Timeline of Yellow Buses collapse into administration

The administrators contacted three potential operators to buy Yellow Buses but two couldn't commit to a purchase before the company’s funds ran dry, the report said.

By July 21, it did not look like a sale of the company could be achieved. The next day, the third option, National Express, showed their interest in buying part of the coaching part of the business. 

With consent of the bank, Yellow Buses was put into administration on July 29. Staff were notified and told sufficient funds were available to pay their salaries for one week. 

“Whilst a number of staff took the decision to hand in their notice, we were pleased that the numbers were limited and with the continued support of the staff we traded the business pending a sale to National Express,” Simon added. 

Read more: National Express to buy Yellow Buses' coach division

“We worked with the staff to gain a thorough understanding of the business and its processes. It was deemed not cost effective to run a full service and we notified the local council that we would run a reduced service.” 

Staff were notified in a morning meeting on Wednesday, August 3 that the next day would be Yellow Buses’ last. 

The administrator praised the “appreciation and gratitude felt by the local community to the staff and company” as the buses returned to Yeomans Way for one final time. 

Administators say staff redundancy pay and pay in lieu claims are estimated at more than £1.9million and rank as unsecured claims. 

National Express bought the coaching side of the business (Image: NQ)

During the early hours of August 6 National Express agreed it would buy only the coaching and engineering side of the business, along with the main premises. They bought the business records relating to the coaching part of the business for £1, as well as fuel and Adblue left on site for £13,114.

They also bought the plant and equipment for £45,000 plus VAT and a month’s worth of rent and licencing for Yeomans Way worth £30,000. 

Read more: Report into Yellow Buses' debts reveals what is owed to who

Unsecured creditors, those who have no security over any of the debtor's assets, are estimated to receive receive dividends of 3.29 pence for every £1. 

In total, there are 65 unsecured claims totalling £3,754,382 out of an estimated 120 anticipated creditor claims. 

The report also reveals investigations into the conduct of the company’s directors, David Squire, Simon Newport and Phil Pannell, will be carried out as required by law.