ICSM Business - Print Industry Insolvency News: unsecured creditors left with £175m in unpaid invoices after collapse of Communisis as Paragon step in with a pre-pack (but the pension fund is dumped)

ICSM Business - Print Industry Insolvency News: unsecured creditors left with £175m in unpaid invoices after collapse of Communisis as Paragon step in with a pre-pack (but the pension fund is dumped)

By Harry Mottram: Wow. How the mighty have fallen - with one bid for the Leeds based print, media and marketing giant Communisis of just £1 after the collapse of the firm last year the scale of the failure of the business has been revealed in all its shocking details. Now UK outfit Paragon has acquired ‘certain trade and assets of the CE business, and the shares of the BD division and agencies Psona and Editions’ in a £26m pre-pack through Interpath. In an informative and detailed account of the acquisition by Jo Francis in the trade publication Print Week the excruciating process of the sale and rescue of part of the collapsed Communisis empire was spelt out beginning with an incredible 36 expressions of interest before it was whittled down to 11 and finally to two and then finally Paragon as various bids including one for £1 didn’t stack up.

Ian Carrotte of ICSM - the business membership group dedicated to fighting bad debts and late payers with many members involved in the print and allied trades – said the demise of Communisis left a ‘shocking trail of debt to suppliers’ which brings shame to the industry. He said: “Jo Francis reported on the liabilities of the one-time industry heavy weight which shows in her report that there was around a total of £170 million pounds of unpaid bills and invoices. That is terrible for the firms and no doubt individuals involved as they could well be brought down by that level of debt. It once again shows how traders with famous name clients should stick to their credit terms and not swallow the old line of ‘we’re too big to fail.’”

In her article Jo Francis explained how one after another the potential buyers pulled out as the size of the debts became evident and also as to which parts of the business were viable. The customers of Communisis paid to keep the presses rolling at one stage to ensure they could still receive their brochures and literature they had already ordered.

One sticking point was the ‘absence of funding from the parentco for a ‘dowry’ of £50m-£75m to help smooth a solvent acquisition’ to help secure the deal – which was in effect added to the price that was asked. And then there was the pension pot which according to Print Week is likely to be picked up by the industry’s Pension Protection Fund set up in 2004 by an Act of Parliament to compensate for lost pensions. Remarkably it now has over 10 million members from thousands of ‘dumped’ pension schemes from collapsed companies.

Finally Paragon took charge of part of the Communisis collection of businesses with the loss of 638 jobs but at least 581 jobs were saved. The saga is not yet over with the sale of some assets to take place and unsecured creditors yet to find out if they will get any of their money back.

Jo's article can be found here: https://www.printweek.com/content/news/revealed-the-struggle-to-sell-communisis


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