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A struggling care home pharmacy that recently entered administration owes over £5m to creditors and failed to pay PAYE for over 30 months, newly published documents have revealed. 

Administrators from Begbies Traynor LLP were appointed to the insolvent Norfolk-based Universal Pharmacy Limited (UPL) on August 4, having first been approached by lender Castlebridge Finance in May of this year as the latter sought to “limit its loss”. 

The administrators learned UPL had “substantial secured and unsecured debts” amounting to £5.3m and was “reliant on Castlebridge for working capital to fund ongoing trading,” according to a report detailing their proposal which was published on the Companies House website yesterday (September 17).

They said they were initially hesitant to take on the appointment as distance selling pharmacy (DSP) contracts can “have limited value,” adding that when they met company director Nadeem Sarwar in June this year he “did not promptly provide all the required source information”.

By that point, UPL had “effectively ceased to trade” and was in the process of making its 25 employees redundant.

The company was unable to obtain all the medicines it needed to fill prescriptions for its care home users on a timely basis.

The administrators were informed that its customers were being signposted elsewhere and that “many of the care homes” were taken on by Remedi Healthcare, a company Mr Sarwar bought out of administration in late 2024. UPL acted as a guarantor of that sale. 

VAT refund main cash source for creditors  

Mr Sarwar reportedly indicated that UPL was owed a "large sum" by Phlo, an online pharmacy business he founded but left in 2024.

In a High Court ruling published in June, the judge summarised allegations of financial misconduct relating to Mr Sarwar’s time at Phlo. These allegations, which Mr Sarwar disputes, were not the subject of criminal proceedings and have not been tested in court.

The administrators concluded that reconciling the position between UPL and Phlo would be “difficult and time consuming” and that the supposed debt “was unlikely to be a source of funds” to UPL’s creditors without “substantial effort and cost” and potentially lengthy court proceedings. 

They eventually accepted their appointment as administrators when an inspection of the company’s HMRC online account revealed that no VAT returns had been submitted since January 2023, meaning UPL could be due VAT refunds in an estimated range of £750,000 to £1m.

This will be offset by a £406,000 liability after it also emerged the company had not paid PAYE since January 2023 despite submitting monthly returns. 

The administrators propose to use any recovered VAT funds to pay as many of UPL’s debts as possible but note that it is impossible to estimate the size of the refund at present. 

The secured creditors are Castlebridge (owed £1m as the holder of a fixed charge and the first qualifying floating charge) and another lender named Cubefunder (owed £3.5m under a fixed charge and a floating charge).

The administrators said it is not yet possible to estimate how much Castlebridge will recover and that Cubefunder is “not expected to make a recovery”.

Commenting on the chances of UPL’s former employees being paid their wage arrears and holiday pay, they said there “are likely to be sufficient funds” up to a maximum of £35,663 but this “is dependent on the recovery of VAT from HMRC”.

UPL’s unsecured creditors, largely made up of lending companies, are unlikely to see any dividend. 

A full list of creditors has not yet been provided, the report adds. 

Next steps

A buyer has been found for UPL’s distance selling contract and solicitors have been instructed to act “as soon as possible” because it is “still possible that the integrated care board could terminate the contract” as UPL was in breach of its DSP contract for a period of time leading up to the administration. 

While the purchase offer amount has not yet been revealed, the administrators expect the sale of pharmacy stock to realise between £10,000 and £20,000, while the sale of an as-yet-unbuilt dispensing robot could realise up to £140,000. 

They said that once their work is completed – which will include efforts to establish “the financial position between [UPL], Phlo, Remedi Healthcare and Mr Sarwar” – they propose making an application to court to wind up the company. 

P3pharmacy has attempted to reach Mr Sarwar for comment.