A letter seen by Printweek that was sent to creditors dated 2 November 2021 said the board of the Leicester-based business that now goes under the name DS Remco UK Ltd, “having regard to its financial position” have decided to commence liquidation proceedings.
The business was previously registered as Office Depot UK Ltd but changed its name to DS Remco UK Ltd on 1 October 2021 according to a filing at Companies House.
The document sent to creditors said Turpin Barker Armstrong has been asked to assist in the convening of a virtual meeting of creditors, and in the preparation of a statement of affairs for presentation at the meeting, and at the virtual meeting resolutions will be sought for the nomination of a liquidator.
A ‘Meetings of Creditors’ notice has also been filed on The Gazette regarding the meeting, which will take place at 2.30pm on Monday (15 November 2021).
Total debts owed to trade creditors across the industry, including printers, kit manufacturers and paper companies, were around the seven-figure mark.
The biggest overall creditors, however, included HMRC, which is owed £3.85m, and inter-company creditor, DS Remco G UK Ltd, which is owed £60.9m.
The total owed to creditors overall by the business was £67.4m, while the estimated total assets available for preferential creditors was £722,254, with no assets available to unsecured creditors.
In the document sent to creditors, a director’s summary of events said the office and workplace supplies company’s cashflow suffered in recent years as a result of large overhead costs which were largely due to overcapacity in its two distribution centres and an overly complex IT infrastructure.
The overhead costs were too high for the level of sales and margin generated, while sales had also declined in recent years as the group focused its efforts on more profitable areas within the group.
Covid-19 caused a further sales decline, and on recognising that the current business model was no longer viable, neither the group nor investment group Aurelius were prepared to provide any further financing.
The summary of events went on to mention various restructuring activities that took place in 2020, and the acquisition by Paragon’s OT Group division earlier this year of the contracts part of the Office Depot business.
The Paragon acquisition followed the group’s purchase of various businesses and assets from Spicers Office Team (SPOT) last year, when Paragon Data Analytics was subsequently renamed OT Group as part of the takeovers. OT Group trades as OfficeTeam.
The business agreed to take over Office Depot’s larger mid-market, major and public sector contract customers in the UK and Ireland, and as part of the deal it was also set to take on print, marketing and comms business Vital Communications in Dartford, and Office Depot Europe’s distribution centre in Ashton-under-Lyne.
The director’s report said DS Remco UK Ltd also took steps to sell its outstanding accounts receivable balances to various parties in an effort to reduce liabilities to creditors.
The company continued to trade until 27 September 2021 to allow the sale of the contracts business to Office Team and the sales of the accounts receivable balances to be concluded.
The report continued: “It should be noted that in advance of the transactions referred to above, the company attempted to sell its entire business as the board recognised the business model was not viable and the group wishes to focus its efforts on other business.
“The company engaged KPMG to market the business in early 2021, however, there was no interest hence why the board considered its other options and entered into the sales/transactions set out above.”
