The paper merchant, also known as Ebb Paper after its trading logo Mr Ebb, is owed 275,000 by the south London company after it was placed into administrative receivership last week. It is unlikely that it will recover any of the money.

Elliott Baxter managing director Tim Elliott said: We have seen it coming [the closure] for some time and had been working to reduce our exposure at the company. The debt is fully provided for in our accounts last year.

It is believed that Elliott Baxter does not insure itself against bad debt, preferring to build up close relationships with its clients.

The full list of creditors has not yet been released by Tenon Recovery, but it is believed that other paper companies have been hit, albeit for much smaller sums.