Portland Business & Financial Solutions, administrator for the Kent-based company, was appointed 22 September, and said it expects to move the company into liquidation "when we judge the timing to be appropriate", at which point it said it would initiate an investigation into the "transfer of the company's plant and machinery in January 2011".

It added that these assets had been sold but "the company still had the use of the items" while all staff were "transferred out of the company and their cost became part of the intercompany balance".

A spokesperson for Portland Business and Financial Solutions said that EPC's plant and machinery had been sold to another company owned by the Commercial Envelope Group and that it would investigate whether its assets were sold at market value. Action could be taken against the company if the assets were sold at a rate significantly less than their true value, he added.

EPC was acquired last December by the Commercial Envelope Group (CEG), a company founded by Crossways Envelopes MNF director John Sherwen. CEG restructured the group in an attempt to maximise efficiency, by closing an EPC plant at Erith and moving the company to its Dartford premises and by making some redundancies.

The administrator listed a number of problems which led to its collapse: these included production inefficiencies, undercapitalisation and a lower level of sales and margins than expected based on the previous year’s figures.

According to its reports, following the acquisition EPC implemented a new accounting system, which revealed that the company was making significant losses.

EPC's accounts reveal it made a loss of almost £800,000 for the period 1 January to 22 September. Its turnover for the same period was £1.048m with costs of sales at £1.532m.

The business finally went into administration when investor International Assets & Resources, which financed the EPC acquisition, became concerned about the long-term viability of the business and called in its loan, giving directors no option but to cease trading.

Portland Business & Financial Solutions’ report said: "The company made further redundancies to reduce costs but it also became apparent that Crossways was unable to economically produce the significant numbers of envelopes for EPC due to the small order sizes and the large number of differing specifications needed."

All staff at EPC had been transferred over to CEG by the time it went into administration, according to spokesperson at the administrators.

Sherwen was unable for comment at the time of publication.