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NAPM promises to take action against 'dubious' pre-packs
The National Association of Paper Merchants (NAPM) has said it is prepared to take legal action against "dubious" pre-pack deals as the industry tightens its policies after being hit by the increasing number of print company insolvencies.
A spate of administrations in the industry over the summer has seen many merchants lodging multi-million pound insurance claims and facing increasingly expensive policies. Many businesses were resurrected following pre-pack deals, in which a buyer is arranged prior to the company being placed into administration.
The NAPM said it is closely monitoring the rate of pre-packs and its director, Tim Bowler, has confirmed he is prepared to challenge the legality of any apparently “dubious” pre-pack arrangements.
According to Antalis’s UK credit manager Steve Parkins, pre-pack deals often result in the merchants being cut out of the loop, with no opportunity to explore the options available.
He said: “We will try to support a struggling business if the directors are prepared to enter into dialogue with us at an early enough stage, but because of the immediacy of the sale, it is often difficult to obtain accurate business plans before being asked to supply.”
PaperCo managing director Steve King agreed and said that unsecured creditors are often “left in the dark”, with no creditors meetings and no opportunity to approve the deal. “Therefore we are unable to understand whether this arrangement is to our benefit,” he added.
According to the merchants, the key question is whether the failed business is still viable under new ownership or likely to default again within a few months.
Many argue that the situation has become more complex due to the rise in pre-pack administrations in the past few years. However, Elliott Baxter’s managing director Tim Elliott said he believes a number of pre-packs are phoenixes or “quasi-phoenixes”.
He said: “Our policy is clear. We will not trade with any organisation that we believe is a phoenix.”
PremierBeswick managing director Graham Griffiths said he “very much supports” the NAPM’s industry line on pre-pack deals.
NAPM ON PRE-PACKS
• Closely monitoring pre-pack incident rate
• Members increasingly suffering from bad debt
• Number of print company failures appears to be rising
• Will challenge the legality of dubious pre-pack arrangements
Bowler: challenge pre-packs
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Comments
Dave Brent - 03 October 2008
It's a bit rich, Tim Bowler getting on his high horse. Wasn't it Tim that was Managing Director of paper merchant, Samuel Crowther when it went bust leaving suppliers high & dry?
People in glass houses shouldn't throw rocks!
Dave Brent - 03 October 2008
Here's a journalistic tip for Print Week.
Do some research into how many Pre Packs are backed by the same Invoice Discounting Company - I think you will find they are behind what goes on, often selling off the assets on the cheap to someone who will agree to continue using them for invoice finance.
Now that would be a worthwhile article!
Dave Brent - 03 October 2008
I am outraged that a failed director thinks he can coume on here with his holier than thou attitude.
I too think Pre-Packs are a scam but people in glass houses - you should be ashamed.
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