A1 Paper is an independent business that was formed 40 years ago. The company is a member of the Associated Independent Merchant Stockists (AIMS).

According to Companies House, A1 Paper's turnover for the period ended 30 June 2009 was £4.9m on a pre-tax profit of £54,000.

Turnover for the year ended 31 December 2008 was £9.2m on a pre-tax loss of £323,000.

A statement on its website said that the "affairs, business and property of A1 Paper" were being handled by the administrators.

AIMS and A1 Paper were unavailable for comment, and the administrators could not be contacted at this time.

Elsewhere, fellow AIMS paper merchant GFSmith has announced that Mike Wheat, the former managing director of A1 Paper, is to join the business with immediate effect.

The company added that a number of key members of Wheat's team at A1 Paper will also be joining the merchant.

Phil Alexander, GFSmith joint managing director, said: "It was a natural fit for Mike Wheat and some key members of his team, following the sad closure of A1, to join GFSmith. 

"With Mike and his team's expertise and contacts in this arena … this will give a seamless transition for many of A1 Paper's customers."

He added the move meant there was great potential to substantially increase the company's presence in the sector, and confirmed to PrintWeek that the business had in no way taken over A1 Paper.

An industry insider said: ''It may come as a shock that a UK paper merchant with a £10m turnover has ceased trading. This is terrible news to the paper mill suppliers to A1, which have incurred high bad debts.

"Both mills and merchants continue to reduce costs to ensure that they see themselves through this recession."

He added that printers need to appreciate both the true value of paper since enormous pulp increases and the costs of supplying them by their merchant.