CBS Packaging has bought the intellectual property, name and various assets of corrugated packaging manufacturer Charapak in a pre-pack deal after the company fell into administration for the second time in two years.
Established in 1980 as Charapak Ltd, the Alfreton, Derbyshire-based business had initially fallen into administration in early 2017.
Its directors at the time, Peter Ward Squibb and Richard Smith, set up a new company, Charapak Packaging Ltd, and bought the business and assets in a pre-pack deal in February 2017.
However, the new company, which had sales of £7.7m in the 13 months to March 2018, ran into trouble again last year after it lost 25% of its business after losing two contracts, one for £1.2m and a second valued at £700,000.
Replacement business could not be sourced quickly enough, which caused serious cashflow issues. As a result, Squibb and Smith sought further investment and appointed a new investor partner as chairman in September 2018.
With a sale and purchase agreement achieved, completion had been anticipated in October 2018. But, prior to completion, the investor withdrew their interest.
The directors continued to seek further investment or a sale of the business and were in discussions with “several interested parties”, but after falling behind on PAYE payments to HMRC all interest was withdrawn and it became “highly likely” that any sale would only be achievable via an insolvency procedure.
In December 2018 the company approached Duff & Phelps and the insolvency practitioner began marketing the business on 4 January 2019.
Sarah Bell and Steven Muncaster of Duff & Phelps were formally appointed joint administrators of Charapak Packaging Ltd on 28 January 2019.
“On appointment we took the decision not to trade the business given the lack of working capital, and the costs of trading would outweigh the benefits of doing so,” said Bell.
The administrators concluded that the best outcome could be achieved by selling the company’s assets as a going concern via a pre-pack sale.
Certain assets, including finished goods, work in progress and raw materials and intellectual property including the website, customer database and company name were sold to CBS Packaging, based in West Bromwich, West Midlands, on the same date the administrators were appointed.
CBS said it is currently in the process of integrating Charapak’s assets into its own capabilities and that Smith is currently working with the company to integrate Charapak’s customers into CBS.
The group said the deal would enable it to further increase its presence in the UK corrugated packaging sector, while giving its turnover a further boost, now closing in on the £30m mark.
CBS has not taken on any of Charapak’s 59 staff, who were all made redundant following the appointment of administrators on 28 January.
CBS employs around 200 people across its sites in West Bromwich and Benfleet, near Southend-on-Sea in Essex, with a combined space of more than 37,000sqm.
Jon Glazier, sales director at CBS’ Benfleet site, told PrintWeek: “Charapak is very similar to the CBS south site, which I run, so most of the work from Charapak is coming through the site here in Essex because a lot of it is BRC accredited.
“Food, beverage and the internet are three areas that Charapak were heavily involved with and CBS’ south site is also very much involved with those areas, so that was the interest for us.”
He added: “The group has only had the business in Southend since 2013, but in the five years since then it has invested quite heavily in plant and it’s in the process of quite extensive investments in the West Midlands this year.”
Following the sale to CBS, on 4 February Duff & Phelps separately sold Charapak's encumbered and unencumbered plant, machinery and vehicles to Maltby Forman, whose directors include Charapak’s former directors Smith and Squibb.
A spokesperson for Maltby Forman said the business will be selling on the kit acquired through a combination of auctions and private sales.
Maltby Forman, which had also been previously operating as a separate entity at Charapak's Alfreton site, meanwhile continues to operate a separate coated paper business at the premises.