Sydney CBD-based McDowall Creative was liquidated on 31 May after running up debts of $300,000, including $100,000 to the Australian Taxation Office, $53,000 to Artarmon-based Green & Gold Printing, $47,000 to Lindsay Yates Group and $11,000 to Cunneen Signs in the suburb of Holroyd.
The creditors list also included Immij ($5,500), Print Motion ($3,000) and Digitalpress ($1,400).
Prografica chief executive Kerim El Gabaili said although the acquisition had not included any debt, he and the agency’s former owner, Sue-Ella McDowall, had taken it upon themselves to pay off most of the creditors to look after printers and protect the brand.
The new entity is co-owned by Prografica and McDowall and being managed by McDowall, according to El Gabaili.
McDowall told ProPrint that the liquidated firm, which specialised in property, was “a victim of the global financial crisis”.
“It was a voluntary liquidation. It was the best option to be able to do the right thing by staff,” she added.
She said she had done the deal with Prografica for “a token fee”.
“There was really nothing – not even enough to pay any creditor. It was basically an exchange. Rather than a sale, it was a merge.”
El Gabaili wouldn’t be drawn on the value of the deal, but he did reveal that it had boosted Prografica’s revenue by 50% and added four to its headcount.
He said Prografica had acquired McDowell Creative’s name, staff, database, client list and website.
El Gabaili conceded that borrowing money to fund a business was a difficult decision to make in the current environment, but said he was confident “a good chunk” of the debt would be paid off within six to 12 months.
He told ProPrint that the acquisition would help his company continue to move upstream. “We want to be part of the decision-making process [with clients], so we need to have a strategic front end and also the deliverability at the back end.”
The liquidator of McDowell Creative, Steven Gladman of Hall Chadwick, told ProPrint that the agency had been sold before its residual parts were liquidated, so it had no realisable assets and the creditors wouldn’t get any money back.
Adrian Blessington, owner of major creditor Green & Gold, said McDowell’s demise had taken him by surprise.
“I know she had been having a tough time, but she mentioned to me that she had got through that.”
Lindsay Yates director David Shoppee said the failure showed the difficulty of the market and the importance of credit management.
He also stressed that Lindsay Yates was in sound shape despite also being burned for up to $42,000 by the SEMA collapse.
“It’s never pleasant, but even though we don’t carry insurance, we’re OK,” he said.
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