Paperlinx UK owed trade creditors more than $106m and its pension funds more than $360m when it went into administration in April, plus millions more to financiers.
Reports to creditors obtained by ProPrint sister magazine PrintWeek reveal the massive deficits, mostly to paper manufacturers, which were the result of the operation bleeding more than $1m a week.
The company had posted sales down 11 per cent to $1.03bn with a net loss of $31m for FY2014, and sales were just $300m, with a net loss of $40m, to the end of February 2015.
Chief executive Andy Preece told ProPrint there were several reasons for the UK operation’s collapse, but administrators at Deloitte say the trigger was the breach of covenant on an $80m loan from ING.
[Related: The ups and downs of Paperlinx]
European manufacturers are owed the most with Stora Enso hit for £10.5m, Lecta Paper just over £6m, and Arctic Paper £2.9m. However, about 4000 pallets of stock have been recovered from Paperlinx warehouses, which may mitigate these figures.
The company also owes more than £10m to in taxes. It is unclear whether unsecured creditors will get anything back, with administrators saying returns are likely but will be ‘modest’.
Administrators had tried to sell Paperlinx UK as a going concern, but ‘the levels of operating losses and supplier and other debts’ doomed this effort, with the massive $360m pension deficit a major sticking point.
It did manage to sell some pieces for $14m, including $3m from Paperlinx’s failed VTS business, and $11m for and its three packaging businesses, which were not in administration.
Meanwhile, administrators currently expect Paperlinx Benelux secured creditors ING and RBS Invoice Finance, owed $43m, will be paid in full from outstanding debts it is collecting from Paperlinx customers.
Leftover money from the UK debtor books could also be used to make up any shortfall in Benelux, but not before they find $5m to pay Deloitte for six weeks of services since its appointment.
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