Typhoo Tea has fallen into administration as the 120-year-old brand’s sales slump, losses widen and debts rise.
Advisory firm Kroll has been appointed to handle the administration and find a buyer for the tea business.
Manufacturer and distributor Supreme is front runner to buy Typhoo, the BBC understands.
Typhoo has been trying to turn itself around for some time, but it suffered a setback after trespassers damaged its former factory in Moreton, Merseyside last year.
“The company has been exploring a sale of the business and assets which is in the process of concluding,” Kroll said.
“The administration process provides Typhoo Tea with protection, allowing the Joint Administrators to finalise the sale in order to rescue the business.”
It added the firm had been dealing with “significant cash flow constraints as a result of supply chain disruptions and subsequent service issues”.
According to the firm’s latest results, which cover the year to the end of September 2023, pre-tax losses widened to £38m from £9.6m and sales fell to £25.3m from £33.7m.
The results also revealed £24.1m worth of “exceptional costs”, some of which relates to the break-in at the Moreton plant, which was shut down last year.
Meanwhile, the company’s debts have ballooned to greater than the value of its assets.