Matt Smith and Neville Kahn of Deloitte have been appointed joint administrators of a number of Paperlinx UK businesses, including Robert Horne Group, Howard Smith Paper Group, The Paper Company, and Paperlinx Services (Europe).
Employees were told the news this afternoon (1 April).
Paperlinx UK had employed around 1,200 staff and up to 693 are being made redundant. 14 sites will close, with most of the sales offices closing immediately. Five sites will remain open.
The affected workers were told to clear their desks and leave the offices by 4pm, said one former employee of the business.
“It was awful, people were told to go to either the staff restaurant, or a conference room depending on whether they were being made redundant or staying on,” said one employee.
The UK packaging businesses - Parkside Packaging, 1st Class Packaging and Donington Packaging Supplies - are not included in the administration.
In a statement, Smith said: “The administration appointment specifically relates to Paperlinx UK’s paper and visual technology solutions businesses. The industry has faced an increasingly challenging environment due to falling demand as digital communications have increased. We are investigating how best to maximise value in the businesses for the benefit its creditors.”
He said the businesses would continue to trade “on a limited basis” in order to realise the value of stock and other assets.
Today’s drastic action is likely to have a major impact on the UK printing industry supply chain, as Paperlinx was the country’s biggest merchanting group.
Previously, a senior source at one major merchant had told PrintWeek: "If it [Paperlinx] went, I can't imagine what would happen. The disruption would be incredible... Even though Paperlinx is smaller than it was, the volumes are still huge. The other merchants won't be able to cope with it. It's an extremely unusual set of circumstances."
The remaining five Paperlinx UK sites, including the Northampton head office “will continue to actively trade but on a more limited basis than previously.”
Deloitte is looking for a buyer for all or part of the business and its assets, including the packaging operations that are not in administration.
Trading in the shares of Paperlinx UK’s publicy-quoted Australian owner have been suspended since 26 March due to a cash crisis in its European operation because of a possible breach of banking covenants with one of its financiers in Europe.
The parent group has not yet commented on the latest development.
Paperlinx Ireland, which trades in Northern Ireland and the Republic, and the Paperlinx operations in mainland Europe, Asia and Australasia are unaffected.