Garnett Dickinson Print has left an estimated shortfall of £29m, including a £25m pension deficit and £4.1m owed to trade creditors.
The circa £17m turnover Rotherham web and sheetfed printer went into administration on 24 January, along with sister mailing operation GD Direct Solutions and parent company Garnett Dickinson Holdings.
Joint administrators Jonny Marston and Howard Smith from KPMG have now reported on the pre-pack sale of the business and their progress so far.
In their report, Marston and Smith pin the blame for the firm’s failure firmly on the problematic installation of a secondhand 48pp Sunday press from the shuttered Artisan Press site, which was installed in September 2016. KPMG said that operational issues with the press caused the company to lose £1m in the first quarter of its financial year, resulting in “acute cash pressure”.
“The directors of the group were forced to enter into discussions with key suppliers, HM Revenue & Customs, its landlord and the secured creditors as the group was struggling to generate sufficient working capital to continue trading,” the KMPG report stated.
“Accordingly, the directors looked for other funding solutions and approached the ultimate shareholder of the group, but were unsuccessful in securing additional funding.”
The ultimate shareholder is the group’s former chief executive Nick Alexander, via his Wagner Investments vehicle.
KPMG had originally been engaged by the company at the beginning of December to advise on restructuring its defined benefit pension scheme, but the task switched to an accelerated sale process later in the month as the company's financial position deteriorated.
KPMG contacted 97 turnaround investors and private equity companies, but no offers were received. It then approached six trade competitors, which resulted in one offer.
The business and assets of Garnett Dickinson Print and GD Direct Solutions were subsequently sold in a pre-pack deal to newly-formed company GD Web Offset for £150,000.
GD Web Offset is owned by Aspenlink chief executive Jeremy Spring and Paul Mursell, director of Southend-on-Sea web and sheetfed printer EWO Media.
Hertfordshire-headquartered paper converter and merchant Aspenlink was also a creditor, and is owed more than £255,000 by Garnett Dickinson Print.
Paper and consumables suppliers were, unsurprisingly, among the firm’s largest unsecured creditors (see below). Collectively paper suppliers to the company were owed more than £2m, while ink supplier Flint Group was owed £444,073 and plates supplier Agfa had a £114,171 deficit on its account.
However, KPMG also said it was dealing with a “significant number” of retention of title claims.
The three secured creditors were Royal Bank of Scotland, RBS Invoice Finance, and Lombard North Central.
KPMG is currently working to collect the company’s debtor ledger, which was £3.5m at the time of the administration although KPMG said some historic balances were considered “uncollectable” and it expects to bring in £2.6m.
The administrators also said that unsecured creditors were likely to receive some sort of dividend, with the caveat that “the quantum of any dividend is currently uncertain”.
A number of inter-company debts were also detailed. Garnett Dickinson Print owed GD Direct Solutions £211,880 although the statements relating to GD Direct Solutions state that it was owed £198,468 by Garnett Dickinson Print.
At the last actuarial valuation the deficit in the Garnett Dickinson Holdings defined benefit pension scheme was £10m, but this had ballooned to £25m at the time of the administration.
The total shortfall at Garnett Dickinson Print, including £8m of share capital, was £37.2m.
KPMG has estimated its time costs for handling the administration at £400,165.
PrintWeek understands that engineers from Goss have been on site at GD Web Offset this week to rectify the issues with the web press.
Garnett Dickinson Print major creditors