Ebor Ice Cream Company - the firm which supplied generations of York residents with traditional ices - is going into liquidation.

And ice cream giant Walls was blamed today for the firm's demise - along with the miserable summer of 1998 - by turning down a rescue package.

Hunter Kelly, partner with insolvency practitioners Ernst & Young of Leeds, said Walls rejected a voluntary arrangement for the payment of creditors which had been accepted by almost all other creditors, including the bank.

Under the deal, creditors would have been paid back 32p in the pound of the money they were owed over 18 months, and Ebor would have continued trading with six jobs saved.

He said that now, after preferential creditors such as the Inland Revenue had been paid, the rest would get nothing and the workers had all been laid off. "I find their (Walls') decision very hard to fathom."

But a Walls spokeswoman strongly defended the company's position.

Jill Turner, ice cream business manager, said it had originally tried to organise deferred payments with Ebor, but the proposal had been unacceptable to Ebor's bank.

She said Walls had then been asked to write off part of the debt, but the firm dealt with 200 wholesalers and this would have set a precedent for dealing with all of them, at a time when Walls was required by the Office of Fair Trading to be treating all distributors equally fairly.

Walls had also been unhappy that a recovery programme for Ebor had included proposals to increase the promotion of other firm's brands rather than its own.

Ebor ice cream was made in York from 1921 until the firm closed its factory in Lawrence Street last year, blaming access difficulties and changes in the market.

Production of the Ebor ice cream brand was switched to another firm in the Yorkshire area, while the Ebor Ice Cream Company concentrated on the distribution side of the business based at Pocklington, supplying impulse brands from firms such as Walls, Nestle and Treat and also branching out into the wider market of frozen food distribution.

Mr Kelly said last year's summer weather, the worst in living memory, had led to losses of about £100,000.

This year, the firm had broken even or made a very modest profit, but because of previous losses there was a backlog of creditors.

He said the voluntary arrangement was put to creditors at a meeting on December 15 and, after Walls' rejection, Ebor had had no alternative but to go into liquidation with debts of around £400,000. "It's quite a sad story."

Creditors are now being invited to a liquidation meeting on Christmas Eve in Leeds.

Ebor managing director Neil Telfer was unwilling to speak at length today on the liquidation, but did say: "We are very upset. At the moment, I am involved in winding things up."

He hoped Ebor Ice Cream might still be available to customers in future, saying another firm wanted to continue offering the product.

The Competition Commission has recently completed an investigation into the ice cream industry, following complaints about competition problems, such as "freezer exclusivity" - where a manufacturer provides a retailer with a freezer on condition that only its products are stored. The Commission's report is now with the Department of Trade and Industry.

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