Documents relating to the administrations of Howard Hunt (City), Graft Solutions, Celerity information Services, OR Multimedia and holding company Howard Hunt Mail have been filed by joint administrators Martha Thompson and Francis Newton of BDO, who were appointed in May. 

The filings, dated 10 and 15 July, state that at the time the companies’ directors were yet to provide a statement of affairs, and had been granted a “short extension” to do so. The financial position of each business had therefore been estimated as a result.

Dartford-based direct mail printer Howard Hunt (City) had sales of £35.4m and made a loss of £2.1m in the financial year ending 30 September 2018. However, in the six month period to 31 March this year, losses at the operation more than tripled to £6.9m, on sales of £15.5m.

“In 2018, the management team proposed a restructuring plan, which included group headcount reductions and consolidation of group operating locations,” BDO stated.

“While the bank made additional funding available to meet the cost of the restructuring, it appears management underestimated the level of funding required.”

According to management accounts, Howard Hunt (City) had advanced around £10.2m to other group companies to support cashflow, including an £8.2m load to holding company Howard Hunt Mail.

In turn, Howard Hunt Mail had advanced £7.8m to other group companies, for the same purpose.

The directors owe the holding company around £885,000 according to the report.

By April, Howard Hunt (City) was under increasing pressure from creditors and was itself suffering cashflow issues, with shareholders unable to provide additional investment.

The companies had a group banking facility with secured creditor Santander, with cross-guarantees totalling around £16m at the time of administration. The bank is unlikely to be repaid in full, the administrators said.

Chief executive Luke Pigott had also provided a personal guarantee to Santander.

The total estimated deficiency of Howard Hunt (City) – including nearly £8m owed to trade creditors, £2.3m owed to its 239 employees, and an estimated £2.4m due to HMRC – is nearly £39.6m.

The figure also includes £15.6m of inter-group loans owed by Howard Hunt (City).

Print management wing Graft Solutions (which trades as Graft Services) is listed as owing unsecured creditors just over £9m. That business is also owed £11.6m by Howard Hunt (City), while Graft itself owes other group companies more than £6.7m. Graft had sales of £9m last year and was profitable.

High margin data business Celerity Information Services, which had sales of nearly £7m last year, was due £2.3m in inter-group loans, and is also shown as owing £2.24m in other inter-group loans. Unsecured creditors are owed £3.45m.

£8m turnover digital and brand marketing agency OR Multimedia, also profitable, was owed nearly £2.9m in inter-group loans, and has an estimated deficiency to unsecured creditors of £3.2m. That figure includes just under £400,000 owed to Howard Hunt Mail.

Across the group the amounts owed to Howard Hunt’s wide range of suppliers – including equipment, paper, consumables, envelopes, printers, trade finishers and merchandise suppliers – range from less than £1,000 to high six-figure sums.

One creditor commented: “We have lodged a number of concerns with the administrators. It seems like the inter-company loans were about keeping the truth from the bank and keeping the credit scores up. I have to question why the directors haven’t carried out their responsibilities if the numbers are still not finalised.”

In May Paragon Group acquired parts of the group in a pre-pack deal that totalled more than £9m. It paid nearly £6.1m for certain Howard Hunt (City) assets; £500,000 for Graft; £1.25m for Celerity Information Services; and £1.5m for OR Multimedia.

Jeremy Walters, chief executive at Paragon Customer Communications, told PrintWeek that the acquired businesses were performing well under Paragon’s stewardship: “The businesses we acquired are phenomenal, with great people. Trading-wise things are very good," he said. 

PrintWeek could not reach Pigott for comment at the time of writing.