Elle Media Group has bought the goodwill of MPC Print Solutions, following the £7.5m-turnover business closing its doors last month as the result of a combination of a six-figure bad debt and an ill-fated site move.
Elle Media Group in Basildon has bought the client lists, order book and intellectual property of Enfield-based MPC from LB Insolvency, which is in the process of being appointed liquidator of the business.
In a letter sent to customers, seen by PrintWeek, MPC managing partner Tony Crook said “MPC Print Solutions has joined Elle Media Group and will be trading as MPC Print Solutions part of Elle Media Group”.
However, Elle Media Group executive chairman Bruce Cuthbert said it is not a separately legal entity and is simply a brand name, and while Crook is helping to transition MPC customers to Elle Media Group, he is not an employee of the business.
Nor has Elle Media Group taken on any of MPC’s kit.
As a result of the deal, more than 15 former MPC staff, across a variety of functions, have joined Elle and, according to Cuthbert the company hopes to employ more former employees in the coming months.
“The real tragedy of these things, when they happen, is the impact on the staff and creditors, at least some of the creditors will be hopefully insured, but it’s a different story for the staff,” he said.
Cuthbert added that the deal would offer an orderly transition for former customers of MPC and he hoped that the business would retain around 50% of its sales, which will help the 50-staff, £7m-turnover business accelerate its ambitions to achieve sales of £10m.
“This was simply a business opportunity that we would have been stupid to ignore, if we hadn’t offered a safe haven for MPC customers then I’m sure someone else would have.”
He stressed that Elle was not planning to take on all MPC’s work, but would focus on clients that were a good fit for the business and could be absorbed within its available capacity.
“We will take as much as is sensible and practical, because it all depends on whether we can match the customers’ delivery and price expectations and whether we are at ease with the credit requirement of the customer.”
Elle insures all its customer credit.
Cuthbert said that MPC creditors that are also suppliers of Elle had been supportive because “the culture of Elle today is the same as it was when it was founded in 1982; it’s a company of considerable integrity that meets its obligations”.
As previously reported, MPC closed its doors on 16 June, with its 80-strong workforce sent home.
However, it has emerged that the company was a victim of a £212,000 bad debt from calendar firm Merchandise 365, which collapsed last summer and was also cited as one of the causes of the demise of Anton Group in March, which was owed £121,000.
“Tony and his team [at MPC] worked pretty tirelessly to try and recover from that situation, it has to be said at great personal cost, and I don’t think there’s much more that they could have done in the current marketplace,” said Cuthbert.
“In situations like this, printers can be pretty swift to decry unsustainable pricing, but almost without exception the whole industry is guilty of that. Some people might say that prices of MPC were unsustainable towards the end, but I think that most of the industry is guilty of that at times and it has to addressed.”
According to MPC managing partner Tony Crook the bad debt hit the business in March 2016, the same time it was in the throes of £2m move to a new factory.
“We had been struggling for 18 months, but just making it, but it got to the point, a week before the business closed, that I applied for another personal loan to support the business, but it was turned down at the eleventh hour and we didn’t have the money to pay the wages and carry on,” said Crook.
He then approached Elle Media and a number of other rival printers to find “a suitable new home” for MPC’s customers when “the crunch came”, stressing that it hadn’t been pre-planned.
“I’ve been in business for 27 years and I’ve never not paid a debt or an employee, we started as a photocopying shop and grew it into a £7.5m business. No one is more devastated than me,” said Crook.
He said he was “sick to his stomach letting down the staff and the creditors” and had tried to find alternative employment for as many staff as possible.
He said that as the company’s demise was in no small part down to a bad debt, he understood the impact of MPC’s closure and would be working closely with LB Insolvency to realise as much creditor value as possible.
He said that unofficial celebrity calendar publisher Merchandise 365, which he described as a “serial killer” of print businesses, had placed a number of orders and everything "looked good", it then placed an order for more than £200,000, which was completed and delivered by MPC, but Merchandise 365 subsequently ceased trading and placed itself in voluntary liquidation before payment was made.
This put cashflow under extreme pressure at a time when it was already strained by the company’s move to the site of The Press in Enfield, which MPC had acquired, and the capex associated with the move.
“That really impacted cashflow, big time, up until then we were quite a cash-rich business, but at the same time we were committed to the move and to significant capex,”
“One without the other would have been fine, there’s no doubt we could have survived, but being hit by both at the same time in March 2016 meant that we were seriously weakened, and then there was Brexit in June when sales fell by 40%.”
Crook said that by the end of 2016 the business was profitable again, but from January margins had started to suffer and the company was just too weak to survive.
He added that he had never considered phoenixing the business to clear its debts.
“The word phoenix doesn’t sit well with me, it’s not something I’ve liked other people doing and so it’s not something I would like to do to other people.”
MPC Print Solutions is totally unrelated to fellow Enfield-based Magazine Printing Company, which is sometimes known as MPC. Magazine Printing Company was acquired by Merthyr Tydfil magazine printer Stephens & George Print Group last summer.