Greeting card publishers are among those who have received the disappointing news that they will only receive between 1%-4% of the amounts owed as a result of the Paperchase pre-pack administration at the start of this year. Unsecured creditors, which includes several greeting card publishers, were owed £22.6 million when the retailer was acquired by Aspen Phoenix Newco.
The deal enabled 96 of Paperchase’s 125 stores to continue to trade, and saved 983 jobs, but it caused financial bruising to many greeting card publishers who had supplied the chain and were owed money when the company went into administration.
Echoing the views of others, Matt Genower, managing director of Five Dollar Shake told PG Buzz: “Like others, we are hugely disappointed that the payout is so pitiful. Sadly, though we had pretty low expectations just because this is how things tend to go in these circumstances.”
He added that if nothing else, it further heightens the need to be aware of the risks once you are supplying a retailer who is owned by private equity.
“I am not denying that we, along with many others have enjoyed many good years with Paperchase and loved working with the team there.
I am sure there are some PE owned retailers that are good and honourable to work with, but you just need to remember they’re in it to get their investment back….and a lot more!
We all need to make a profit as that keeps the big wheel turning, but some private equity companies can be rather greedy.”
The Times and City AM are among the media to have covered the news of the payout to creditors.
Ashley Armstrong, the retail editor of The Times detailed that ‘HM Revenue & Customs was been paid in full, along with Lloyds and Permira Debt Managers, Paperchase’s secured creditors, which had been owed £400,000 and £56.4 million, respectively.’
The news article also explained that ‘Permira bought back the business via a £40 million credit bid through an entity called Aspen Phoenix Newco, which reduced the amount it was owed to £15.2 million’ with administrators at PwC working to recover the rest. Plus, how ‘About £7 million of stock was bought by Permira after Paperchase’s collapse, but retrieving it from closed stores took three months because of the difficulty of getting into shops during lockdowns.’
Under the new ownership, back in May Paperchase issued a positive statement of how the stores were trading ‘above plan’ with the buying team having been bolstered by the appointment of Penny Teale as trading director. https://www.pgbuzz.net/positive-trading-messages-from-card-factory-paperchase-and-whsmith/
Top: Paperchase has been a beacon for design-led greeting cards and stationery for over 50 years.
