A HEALTHY noodles business based in Bournemouth went into administration after losing the airline customers who accounted for most of its revenue.

Administrators for Mr Lee’s Pure Foods, which produced Mr Lee’s Noodles, made all its staff redundant earlier this year but are hopeful they can sell the business’s assets.

The company suffered a slump in revenue at the start of the pandemic, losing all the airline customers who made up 70 per cent of its revenue.

Finding new stockists for its freeze-dried noodles became harder as supermarkets cancelled or delayed reviews of their product ranges.

Founder Damien Lee died in January 2021, prompting a “change of strategy” by the new leadership, who identified a need to plough between £1.5million and £1.7m into the business.

Bournemouth Echo: Mr Lee's Pure Foods founder Damien LeeMr Lee's Pure Foods founder Damien Lee

A report by joint administrators James Saunders and Robert Armstrong of Kroll Avisory says the business had been funded since its 2016 launch by £9.5m in equity and £1.7m in unsecured lending. It “can effectively be considered to have been a start-up phase” throughout its existence. 

The business spawned subsidiaries in the USA and Australia, which are not part of the administration, and worked with another business to develop a hot food vending machine.

“Whilst the overseas subsidiaries were able to share overheads with the company to an extent, the costs of running the group business significantly exceeded revenue, and therefore there was a substantial funding requirement,” the report says.

After the new leadership identified the need for more cash, director Peter Tran left the board to lead a business that became the MeeLee Food Co.

MeeLee made an offer for Mr Lee's Pure Foods, involving a swap of shares in Mr Lee’s for a diluted stake in MeeLee, and it pumped £650,000 into Mr Lee’s.

The offer was accepted by 95 per cent of Mr Lee’s shareholders. But “consent from certain shareholders was not forthcoming” and MeeLee was unable to continue its support, the report says.

Administrators were appointed in May and made all 10 staff redundant later that month.

The report adds: “The joint administrators are in ongoing negotiations with a preferred bidder for the company’s assets and are hopeful a sale of the business assets will be completed shortly.”

Mr Lee’s had unsecured debts of £1.04m, including its £650,000 debt to MeeLeeFoods, and had only £3,874 in the bank.

Employees are estimated to be owed £35,380 as preferential creditors, mainly in claims for wage arrears and holiday pay, and another £40,846 as unsecured creditors.

“Based on the current information available to the joint administrators, it is anticipated that there will be insufficient realisations to enable a distribution to the unsecured creditors of the company,” the report says.

Mr Lee’s Australian-born founder Damien Lee died aged 54 after 78 treatments from cancer.

In his final months, he launched a podcast which attracted guests including actors Wesley Snipes and Claire Holt.