Printweek reported in May that the Leicester-based direct mail specialist had found a buyer after it had filed a Notice of Intention to Appoint Administrators (NOI).

Louise Williams and Paul Mallatratt of Opus Restructuring were subsequently appointed joint administrators to Mailbox DM Ltd on 30 May 2024, the same day the pre-pack sale of the company’s business and assets to DMC Encore was completed.

In their account of the events leading to the company’s administration, outlined in the statement of administrator’s proposal which has now been filed at Companies House, the administrators recounted that the business was used in 2020 for the acquisition of certain trade and assets of the Taylor Bloxham Group.

Mailbox DM was previously the direct mail operation of the group, which went into administration in February 2020. 21 jobs were saved at the time by the deal. The report stated that, pre-pandemic, the company was a profitable business with a turnover of around £4m.

The business had two directors who each held an equal share capital – David Wright and Peter Wood.

In April 2020 the business obtained a Covid Bounce Back Loan for £50,000. This was followed in August 2021 with a CBILS loan of £200,000 and then in May 2022 with a further CBILS loan of £120,000.

The report recounted the company’s struggles during the pandemic, including how government support measures enabled it to continue when turnover dropped by around 40%. It then “saw a reasonable recovery through 2021 and 2022”, during which time it was repaying the majority of its historic HMRC liabilities and maintaining repayments on its Bounce Back and CBILS loans.

During 2022 and 2023, client failures meant bad debts totalled more than £40,000.

In 2023 the business was affected by the energy crisis and its electricity costs increased by 300% from April 2023. Consumable and machine maintenance costs increased by 50%. Significant wage pressure, meanwhile, “meant the loss of its most productive staff and a general increase in labour costs”.

The administrators said that unable to pass on these costs to a declining market and by then faltering economy, the business slipped into a significant loss-making position and its working capital began to erode rapidly.

The company attempted to counter these pressures by installing solar panels, temporarily postponing capital repayments on its CBILS loans, and making redundancies.

In early 2023 the business then lost two significant contracts and in October 2023 it lost its largest client. Other clients had been reducing their spend and volumes considerably.

In December 2023, discussions were held with HMRC to manage existing VAT and PAYE liabilities, and to pre-empt potential future late payments to enable the business to trade out of a difficult period. At this point, the order book was strong and the directors believed that the company was solvent. A satisfactory payment plan was agreed with HMRC in December 2023.

In 2024, the business continued to trade through its typically seasonally quiet period from December to February, “attempting to control costs and minimise losses prior to the expected season spring upturn”, but between January and March 2024 it experienced a decline in top line sales, operating margin, and new orders.

It decided to seek professional advice and the directors contacted Opus Restructuring to evaluate the available options.

The directors were asked to provide information on any parties, of which they were aware, who would be interested in purchasing the business and assets of the company.

The directors advised Opus Restructuring that they had not conducted any marketing of the company themselves but that eventual buyer DMC Encore had already expressed interest.

Agent John Pye and Sons was then instructed to market the business and assets of the business. Marketing was undertaken for a period of 13 days and while several parties expressed an interest, and negotiations were entered into with 20 parties, the only firm offer received was from DMC Encore.

“The marketing strategy has achieved the best available outcome for creditors as a whole in all the circumstances because the continuity of a pre-pack sale should maximise the debtors and remove the employee claims,” the report stated.

Following the conclusion of the pre-pack sale of the company’s business and assets to DMC Encore, the sale consideration of £10,000 has been received in full by the administrators’ solicitors.

According to a letter sent by the administrators to creditors, £2,000 of the sale consideration related to goodwill, while the other £8,000 related to finished goods and work in progress. It added 14 employees were transferred to DMC Encore as part of the sale.

Mailbox DM director David Wright told Printweek last month he would fulfil a consultant role within DMC Encore for a six-month handover period while co-owner Peter Wood would be leaving the business to pursue opportunities outside of the industry.

The administrators said they expected to pay a distribution to the company’s secured and preferential creditors.

A copy of the draft Statement of Affairs showed that the company’s estimated total deficiency as regards members was £657,337. Among the unsecured creditors, 27 "trade creditors" were listed as being owed £218,127.