Company runs out of cash and the insolvency practitioners are called in. So far, so normal. But when the company in question is Litho Supplies this can hardly be seen as an everyday turn of events.
In November the £49m turnover plc issued a trading statement to the Stock Exchange saying "...with the reduced level of overhead and with careful management of bad debts and working capital the company expects the overall performance in the second half of the year to be significantly improved". Just five weeks later its shares were suspended and administrators had taken control. My mind is boggling as to why on earth the management would have issued something that now appears to be so misleading.
The supreme irony in all this is that Litho Supplies has historically been so very prudent about hanging on to its cash, and was in fact pretty famous for its tight fistedness. At the end of 2006 it had £5m in the bank, but by Christmas 2008 the company was overdrawn to the tune of £1.3m having splashed its stash on a number of acquisitions, including Graphica Plus and GAE.
As it turned out the timing of these buys couldn't have been worse, although when commenting on 2008's "annus horribilis" - when the group posted its first ever loss in 42 years of trading - sales director Eddie Williams said they would do it all again if given the choice. I wonder if he feels the same way now.
At the time of writing this blog (the morning of 4 January) there wasn't yet any update about what is going to happen next, and whether Litho will become notorious as the first major supplier to pre-pack. The potential repercussions of such a move are immense.
The support of key partners such as Agfa, Flint Ink, Fujifilm, Kodak et al will be vital in any transaction and they are faced with some difficult choices. They need dealers like Litho to provide the route to market in supplying the legion of small printcos that they can't possibly reach with their own diminishing sales forces. It's five years almost to the day since rival supplier Openshaw went bust, and the extraordinary events in Breaston have shown yet again just how vulnerable dealers, big and small, can be.
