In August last year directors Paul and Alan Young placed the business into voluntary liquidation, and signed a Declaration of Solvency stating that the company would be able to pay all its debts, plus interest, within 12 months.
However, the sale of the firm’s 1,420sqm freehold factory in Leamington Spa was critical to this outcome.
It was initially on the market for £1.75m, subsequently reduced to £1.695m, and now slashed to “offers in excess” of £1.45m in a bid to spark interest in the site.
It may even have to be reduced further, to £1.3m.
The building was on Warwick Printing Co’s books valued at £1.48m.
This means that instead of the anticipated surplus of £255,688 stated by the Young brothers last year, the likely shortfall is now estimated at £181,605 in a statement of affairs filed by joint liquidator Andrew Kelsall of Larking Gowen.
Trade and expense creditors are owed £874,912.
In an update to creditors, Kelsall stated: “A consequence of a reduced asking price is that the company will not be able to pay all of its liabilities in full including statutory interest and therefore is no longer solvent.
“Furthermore, a requirement of an MVL (Members Voluntary Liquidation) is that the creditors will be paid in full, including statutory interest, within 12 months of the resolution to wind up the company. It is now very unlikely that a sale of the property could be completed and a dividend paid to creditors prior to 7 August 2023.”
“Accordingly, the MVL must be converted to a Creditors Voluntary Liquidation regardless of the matter of solvency.”
Kelsall also noted: “At the time of the resolution to wind up the company the property market was buoyant and the directors could not have anticipated the crash in the market leading to a reduced asking price and delays to find a buyer.”
Kelsall and his colleague Lee Green are now seeking approval from creditors for the next steps.
Printweek understands there is currently a question mark over a posslble meeting of creditors being organised.
One creditor of the company commented: “People strongly queried the value put on the factory at the time, and now this – not a surplus, but a shortfall.”
Larking Gowen’s estimated outcome statement indicates that preferential creditors would be paid in full, while the anticipated dividend to unsecured creditors is estimated to be circa 73p in the pound.
Warwick Printing Company’s accounts for the year ending 7 August 2022 were not filed at Companies House and are flagged as overdue. According to the Larking Gowen update the business had sales of £6.2m in the period and made a pre-tax loss of £892,287.
