Pre-packing Armageddon

Jo Francis
Tuesday, May 3, 2016

Jo Francis ponders the motivation behind Polestar's pre-pack

Who on earth decided that a pre-pack of Polestar would be a good idea? Worse, the most reviled form of pre-pack – actually a phoenix – with the same management and owners at the helm.

What could possibly go wrong, apart from, basically, everything?

I would love to know who advised Proventus Capital Partners, the reluctant and hapless owners of this problematic print investment, that this particular course of action was the best way forward.

From where I sit, all that this pre-pack has achieved is Armageddon.

Rewind to 2011 when Polestar pre-packed before, and also jettisoned its pension liability. The group’s then finance chief, Peter Johnston, asked about why other options such as a CVA had not been considered, said: “It was important to keep the trade creditors whole, otherwise the business was likely to fail.”

Quite why Polestar’s management and owners thought things were any different now, and that wouldn’t be a big big problem this time around, is beyond me. And whoever thought that key customers would simply sign up for the latest incarnation of the business called that very wrong indeed.

I feel so sad for all the employees facing an uncertain future, and for people at the group’s suppliers who could also lose their jobs because of the aftershocks of an event like this.

I’m also sad that Polestar, which could and should have been a national champion, is instead leaving a toxic legacy of price depression that has affected large parts of the industry.

Here’s something for Polestar chief executive Barry Hibbert to ponder: “The real test of an executive is not just the job they do when they’re there, it’s the legacy they leave when they’re gone.”


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